Preamble

The House met at half-past Two o'clock

PRAYERS

[Mr. SPEAKER in the Chair]

Oral Answers to Questions — PRICES AND CONSUMER PROTECTION

Price Increases

Mr. Durant: asked the Secretary of State for Prices and Consumer Protection what is the latest monthly increase in the retail price index.

Mr. Canavan: asked the Secretary of State for Prices and Consumer Protection what is the latest figure for the rise in the retail price index.

Mr. Rathbone: asked the Secretary of State for Prices and Consumer Protection by how much the retail index has risen since February 1974.

Mr. Gow: asked the Secretary of State for Prices and Consumer Protection what is the year-on-year increase in the retail price index.

The Secretary of State for Prices and Consumer Protection (Mr. Roy Hattersley): The retail price index for December showed an increase of 1·3 per cent. over the previous month and an increase of 15·1 per cent. compared with the same month a year earlier. The index has risen by 65·2 per cent. since February 1974.

Mr. Durant: Is the right hon. Gentleman aware that that is a pretty appalling story? If prices since Christmas have been escalating at an enormous rate, with some items going up 3p or 4p when one would expect ½p, does not the right hon. Gentleman think that that will affect the

next pay negotiations now going on with the Government and put pressure on the negotiations?

Mr. Hattersley: I am not sure what the hon. Gentleman means by "going up by 3p or 4p when one would expect ½p". What has happened over the past few months is that the depreciation in the sterling rate has worked its way through to domestic prices. Now that sterling has stabilised I believe that the position will improve, and I am sure that the trade unions will be wise enough to understand that in any wage agreement.

Mr. Canavan: Does my right hon. Friend agree that it is intolerable that the Government should restrict wages while allowing prices to escalate? We have now reached the ridiculous stage at which the Government stand idly by while pirates are allowed to charge housewives up to 15p a pound for potatoes, and ticket touts are charging football fans the extortionate sum of £55 for a couple of tickets for the Scotland-England international.

Mr. Hattersley: That is something of a multiple question, and I want to give a multiple answer. My hon. Friend used the wrong verb when he talked about the Government controlling wages. Wages are limited by agreement between the Government and the TUC and are a product of the TUC's understanding that that is in the best interests of the nation as a whole.
My hon. Friend had better put down a Question about the two commodities to which he referred so that I can give answers of a length that the problem deserves.

Mr. Gow: Does the right hon. Gentleman agree that trade unions and wage increases cannot cause inflation? Will he tell us what measures the Government propose to announce—since the Government alone can cause inflation—to reduce the present rate of inflation?

Mr. Hattersley: That is a primitive view of the economy, which I think is totally disregarded in all sophisticated quarters. Most of the hon. Gentleman's colleagues, particularly those who were in Government in 1970–74 and invented the Price Code, would regard that as a simplistic view of how the economy should be run.

Mr. Sedgemore: Does my right hon. Friend agree that one significant factor in the continuing rise of the RPI is the rise of between 30 per cent. and 60 per cent. in gross profit margins? Has the time not come to institute an inquiry into the relationship between gross profit margins, prices and investment, and could my right hon. Friend start by having an inquiry into gross profit margins in the brewery industry in particular?

Mr. Hattersley: My hon. Friend had better put down a Question about the brewery industry. As regards the general position, a great deal of exaggerated comment has been made about the effect of increased profit margins on the retail price index. I am sure my hon. Friend will agree that what we ought to consider is not the extent of profits but their use. Profits ploughed back into new investment to create new jobs is something that both my hon. Friend and I want to encourage.

Mr. Donald Stewart: Does the right hon. Gentleman accept that, in spite of the nice-sounding formula about a social contract, wages have been severely restricted, and that if the Government do not give some guarantee about price restrictions the game will be up for the next round?

Mr. Hattersley: It is a matter not of a nice-sounding formula but of a sensibly applied policy, which all the evidence confirms. It is also a policy that is necessary for the continued improvement in the economy. The TUC understands that, and it also understands that our ability to act on prices, though limited, is a policy that we shall operate to the full.

Mrs. Sally Oppenheim: Is the right hon. Gentleman aware that this Government's record on prices has nothing to do with success, complacency or sophistication? Has the right hon. Gentleman any idea what the cumulative effect of four years of double-figure inflation—which is what we shall have had by the end of this year—is likely to be on those who see their life savings wiped out and on those who have a day-to-day struggle to make ends meet and are fighting a losing battle? Is the right hon. Gentleman aware that whatever happens to prices by the end of this year they will have been

higher for longer under this Government than ever before?

Mr. Hattersley: We are all moved by the hon. Lady's identification with the working classes. The important point to which she has to direct her attention is the overall success of our economic efforts. I do not believe that there is any sensible commentator who does not believe that the improvement in the economy that we expect for the rest of this year will not include an improvement in the prices position, and I am sure that ordinary people understand that.

Mr. Rathbone: rose—

Mr. Speaker: Order. The hon. Member for Lewes (Mr. Rathbone) puts me in some difficulty. He did not hear the answer to his Question. I shall call him, since his Question is being answered as one of a group.

Mr. Rathbone: I am grateful to you, Mr. Speaker. I have only just received a message that my Question was to be grouped, otherwise I would have been here in time. I have only just arrived. May I ask the Secretary of State whether, in the light of the points that my hon. Friend the Member for Gloucester (Mrs. Oppenheim) has made, he still stands by his statement that Socialism is an expensive business or whether he sees some reduction in the expense as part of his long-term plan for Britain?

Mr. Hattersley: That is a supplementary question that I am asked at almost every Question Time. I always confirm that I do believe that. The example I give is that it is more expensive to clear the slums than it is to leave people living in hovels. All of those things to which my party is committed require a high level of public expenditure. One of the reasons why I want to see the economy permanently stable is so that we can afford the sort of public expenditure that improves the quality of life.

Price Commission

Mr. Ridley: asked the Secretary of State for Prices and Consumer Protection if he will now abolish the Price Commission.

Mr. Hattersley: No, Sir.

Mr. Ridley: Can the right hon. Gentleman explain how it is that in the four years that the Price Commission has been in existence inflation due to increasing prices, has, on average, been running at a rate about five times higher than in the 1,500 years since the Romans occupied this country? Surely it would be better to go back to the old system.

Mr. Hattersley: When the then Prime Minister, whom the hon. Gentleman supported from time to time, created the Price Commission I do not believe that he promised that it would hold down the rate of inflation. The right hon. Gentleman promised that the Commission would do a number of worthwhile jobs—something I assume in which the hon. Gentleman believes, since on 15th November he urged me to make an additional reference to the Price Commission.

Mr. Gwilym Roberts: Rather than abolish the Price Commission, will my right hon. Friend refer to it the increase in beer prices? Is he aware that my constituents cannot understand that beer prices should be rising while the breweries' profits, over comparative half years, are in many cases as much as 40 per cent. up? Will my right hon. Friend give this matter urgent consideration?

Mr. Hattersley: I am conscious of the great and widespread public concern about beer prices and profits. My colleagues and I are considering this matter and I hope that we shall be able to give good news to the House in the not-too-distant future.

Mr. Neubert: asked the Secretary of State for Prices and Consumer Protection when he expects the next report of the Price Commission to be published.

Mr. Hattersley: In approximately three months' time.

Mr. Neubert: Did the right hon. Gentleman notice the remark of the Chairman of the Price Commission in introducing the Commission's last report, when he forecast that inflation would rise to 19 per cent. in the spring? Does he agree that that figure compares adversely with that of 15 per cent, which is the only figure that he and the Chancellor have mentioned in connection with 1977? Why are the Government being so evasive about price rises immediately before us?

Mr. Hattersley: There is some dispute over what the Chairman of the Price Commission said. If he did mention a 19 per cent. increase he reached that figure as a result of extrapolating the six months to the end of November and the six months following that. That is a wholly unreasonable statistical exercise to enter into, and therefore invalidates the 19 per cent. figure.

Mr. Clemitson: Does my right hon. Friend agree that a number of companies use the Price Code as an excuse to push up their prosperity as far as permissible within the code and then hide behind decisions that the Price Commission makes subsequently? Reverting to an earlier question, will he take it from me, that a number of the brewing companies —Whitbread's, for example, which made a £26 million profit in the last half year—play this game all the time?

Mr. Hattersley: I do not want to make specific comments on specific companies—

Mr. Gwilym Roberts: Why not?

Mr. Hattersley: —because if we referred specific companies to the Price Commission we would be doing so to obtain information. We should not make a judgment about them before obtaining the information. I agree that there are many shortcomings in the Price Code, particularly now that it has been running for four or five years and has long-distant historical base rates. I hope that in the summer we shall be able to improve it in a number of ways.

Mr. Giles Shaw: Will the right hon. Gentleman confirm that on the whole, the pattern of prices reflects costs? Dealing with costs, will he take note that according to an answer published by the right hon. Gentleman's Department the Commission is estimated to cost public funds £6·6 million in the current financial year? Does he agree that one has to add to that figure the cost of administration within industry, which is considerable? Does the right hon. Gentleman think that the consumer and the taxpayer deserve some reduction in these costs?

Mr. Hattersley: I am sure that all of these things were taken into account by the Conservative Government when they


set up the Price Code. I agree that it is, at least theoretically, possible to have a more effective price control system which costs rather less bureaucratically. A number of us are trying to discover ways in which that can be achieved.

Merseyside

Mr. Marten: asked the Secretary of State for Prices and Consumer Protection whether he will visit Merseyside to investigate price rises in that area.

Mr. Hattersley: I visited Merseyside on 21st January to open two consumer advice centres.

Mr. Marten: Is it correct that on that occasion the right hon. Gentleman made a speech dealing with the Common Market and food prices? What action are the Government taking to halt the totally unnecessary rise in the prices of certain food, such as butter, which is going up from 45p per pound to 72p per pound this year, not because of a rise in world prices but because of the common agricultural system? Is it not scandalous that that system should have to be tolerated by the British people?

Mr. Hattersley: The negotiation of the next price round within the Common Market is a matter for my right hon. Friend the Minister of Agriculture. Those specific questions must be addressed to him. I feel sure that the hon. Gentleman knows that my right hon. Friend has been most robust about the Government's position in the next round. I am sure that he will stick to that firmly.

Mr. Heffer: I noticed on television that when my right hon. Friend visited Merseyside he met a deputation from the building workers, who were complaining about rising prices and the high level of unemployment in the area. Will my right hon. Friend say what answer he gave to those building workers?

Mr. Hattersley: There was some dispute about where the deputation was from. Certainly the leaflets that the men gave me bore the imprint not of the building workers but of the Communist Party. What I said to them was that all of us had the deepest vested interest in building a permanently prosperous economy, and that that applied most of all to the people who feared unemployment

and who were unemployed. That was the ony legitimate message that I could give them.

Overseas Products (Origin Marking)

Mr. Madden: asked the Secretary of State for Prices and Consumer Protection what powers are available to his Department to stop goods, manufactured overseas, from being distributed nationally and internationally under United Kingdom trade marks or labels.

The Minister of State, Department of Prices and Consumer Protection (Mr. John Fraser): The Trade Descriptions Act 1972 prohibits the supply of imported goods bearing any United Kingdom name or mark, unless accompanied by a conspicuous indication of the country of manufacture, and the Trade Descriptions Act 1968 prohibits the importation and supply of goods bearing a false indication of origin.

Mr. Madden: Does my right hon. Friend agree that the apparent ease with which overseas manufacturing interessts can obtain and use British labels to distribute imports presents a new and sinister threat to the British economy, which could threaten the jobs of thousands of British workers if the loophole is not quickly blocked by the Government?

Mr. Fraser: I can understand my hon. Friend's concern about certain constituency matters. The question of the takeover of firms in this country by Foreign enterprises is primarily a matter for the Secretary of State for Industry.

Consumer Advice Centres

Mr. Richard Wainwright: asked the Secretary of State for Prices and Consumer Protection what is the total amount granted by his Department to local consumer protection departments in respect of local consumer advice centres and price information collection schemes since January 1976.

The Under-Secretary of State for Prices and Consumer Protection (Mr. Robert Maclennan): To date £531,422 has been paid towards consumer advice centres and £187,435 towards price surveys.

Mr. Wainwright: In the light of those figures and bearing in mind the local rates that have to be paid on local advice


centres, may I ask the Minister when he intends to provide some protection for the consumer against the cost of consumer protection? Instead of providing these expensive staffs, will he harness the multitude of voluntary workers who have a dedicated interest in price checking, as well as great expertise and experience in watching prices?

Mr. Maclennan: I am surprised that the Liberal Party should take such a line on the provision of consumer advice, because this is a matter of considerable and growing importance to a large number of people. It is particularly important at a time of inflation. The Government have every intention of continuing to support this most worthwhile scheme.

Mr. MacFarquhar: Has my hon. Friend given any instructions to such consumer advice centres about the information that they may provide to consumers concerning the extent to which they benefit in terms of food prices as a result of the subsidy given to this country by the Common Market?

Mr. Maclennan: If my hon. Friend is asking what is the value to the consumer of the green pound at present, I can tell him that it is worth six to seven percentage points on the food index.

Bread

Mr. Giles Shaw: asked the Secretary of State for Prices and Consumer Protection what the average price of the standard loaf was in the three weeks starting on 4th January 1977; and what the average price was in December.

Mr. Corbett: asked the Secretary of State for Prices and Consumer Protection whether he will make a statement on bread prices.

Sir George Young: asked the Secretary of State for Prices and Consumer Protection when he next expects to meet the Federation of Master Bakers.

Mr. Hattersley: In January the average price of a large white sliced loaf was about 20½p, against 19½p in December. However, in some supermarkets prices did not rise by the 1p permitted at the beginning of January. In others prices were temporarily forced up by the action

of some deliverymen. I am glad to say that this action has now ended. During recent discussions on prices I have met representatives of all interested parties, including both the Federation of Bakers and the National Association of Master Bakers, but I have no immediate plans for further meetings.

Mr. Shaw: Now that the Mad Hattersley's tea party is over, the consumer is entitled to ask who is better off. Is it the consumer, who was led to believe that there would be substantial reductions in the price of a standard loaf, of up to about 8p? Is it the shopkeeper, whose supplies of bread were disrupted? Or is it the unions, who believed, at least in part, that their members' jobs were in jeopardy? Does the right hon. Gentleman agree that this piece of intervention has caused nothing but shambles and chaos from start to finish?

Mr. Hattersley: No, Sir.The hon. Gentleman calls it intervention. It was a singularly strange sort of intervention, as I was pulling out of Government intervention in the industry. It worked in the end exactly as I had hoped. The hon. Gentleman is wrong in almost all his suppositions, not least that the unions were against what I did. Only one objected. The Transport and General Workers Union and the General and Municipal Workers Union both supported it. As a result of their support and what has come about, the only claim that I ever made will now be realised. In some shops the price of the standard loaf will be lower than it would otherwise have been. The newspapers over the past five days have demonstrated that very clearly.

Sir George Young: Is the right hon. Gentleman aware that housewives are now thoroughly confused by his posture on bread prices? The right hon. Gentleman speaks of reductions. Increases in fuel and flour costs and the removal of the subsidies must mean that prices will rise. Will the right hon. Gentleman now tell the housewives what will happen to bread prices over the forthcoming months?

Mr. Hattersely: What I have said almost ad nauseam for six weeks is that, as a result of the policy which the House has discussed, and which came into operation on 4th January, the price of bread


will be lower in some shops than it would otherwise have been. That is the result of the operation of competitive forces. What I hope the hon. Gentleman will realise, although some newspapers even today do not, is that if one allows competitive forces to work one cannot say at what level they will eventually settle down. This must be the result of competition.

Mr. Heffer: As my right hon. Friend obviously tried to adopt a certain part of Tory policy in this matter, and it has not been successful, does he agree that the lesson is never to adopt it again?

Mr. Hattersley: I do not believe that competition is a Tory instrument. It was our right hon. Friend the previous Prime Minister who introduced the Monopolies and Restrictive Practices (Inquiry and Control) Act 1948, the great protection of competition in this country. I have an interesting quotation from Lenin about competition, which I shall gladly send to my hon. Friend. I believe that my duty is to provide whatever instruments I can—competition or intervention—to bring prices down whenever that is possible.

Mrs. Sally Oppenheim: If the right hon. Gentleman's negotiations were a success, as he has claimed, why did he wait six weeks before entering into them. When he knew that any increase in discount would immediately be offset by an application to the Price Commission for higher prices, why did he enter into that rather shady public relations operation, which backfired on its originator and certainly confused consumers?

Mr. Hattersley: I do not think that it was on me that speeches about bread prices backfired. If the Daily Mail of 13th January last year is to be believed, there were calls from the Tory Party for the hon. Lady's resignation. But that is neither here nor there. I allowed the forces of the market to operate. That must mean that the industry—bakers, retailers and consumers—determines the price in the end. The hon. Lady constantly called in an intemperate way for intervention by me. If I had done as she asked, I believe that the dispute would have continued. A week ago it settled down in the way that I had said it would.

Petrol Stations (Price Display)

Mr. Costain: asked the Secretary of State for Prices and Consumer Protection whether he has yet received further reports from trading standards officers throughout the country on the display of prices in pertol station forecourts; and if he now intends to seek powers under the Prices Act 1974 to improve price display.

Mr. Ioan Evans: asked the Secretary of State for Prices and Consumer Protection if he will now introduce legislation for improved petrol price display.

Mr. Roy Hughes: asked the Secretary of State for Prices and Consumer Protection if he is satisfied with the working of the voluntary agreement on petrol price display.

Mr. John Fraser: I have received a number of reports indicating a poor level of compliance with the voluntary agreement on petrol price display. Most of them, however, relate to a period last year when the agreement had only recently been settled. On my behalf the Office of Fair Trading has therefore asked local authority associations to help with a national survey this month. In the meantime my officials are preparing a draft order under the Prices Act 1974 with the same objectives as the voluntary agreement. Unless the survey demonstrates that the voluntary agreement has worked, I shall immediately begin statutory consultations on the draft order.

Mr. Costain: Is the Minister aware that we welcome the Secretary of State's belief in competition? The reason for my question is to see that competition is fair. Why must the hon. Gentleman wait so long before acting?

Mr. Fraser: The reason is that, having reached a voluntary agreement with the oil companies and the petrol retailers, I think that it would be a breach of faith not to give that agreement a chance to work. I shall not disguise the fact that I am disappointed with its working so far. If it does not work properly very soon, we shall have a statutory price display order.

Mr. Evans: Does my hon. Friend realise that his feelings on this matter will be shared by the vast majority of motorists, who are disturbed by the gross variation between one petrol filling station and another? Does he realise that a survey in mid-Glamorgan showed a variation from 73p to 86p for four-star petrol, and that motorists cannot see the price until they are in the forecourt having their cars filled? Will my hon. Friend examine the matter quickly and act urgently, because there is a great deal of feeling about it?

Mr. Fraser: I shall certainly act urgently on price display. Price variation is a function of competition, which is benefiting the motorist. I want to see that competition working more effectively, not less.

Electrical Equipment (Safety Regulations)

Sir John Hall: asked the Secretary of State for Prices and Consumer Protection what representations have been made to him by the British Electrical and Allied Manufacturers' Association Limited about the unsatisfactory nature of the Electrical Equipment (Safety) Regulations 1975; and if he will make a statement.

Mr. John Fraser: I am aware that the association is critical of the regulations because they do not provide that compliance with standards shall be accepted as satisfying the prescribed requirements. The Consumer Protection Act 1961, under which the regulations were made, does not enable this to be done. But I am considering, in the light of the many comments received in response to the consultative document on consumer safety issued by my Department last February, whether to seek powers to include such provisions in regulations.

Sir John Hall: Is the Minister aware that one of the major complaints of the industry is that the regulations are obscure and very difficult to interpret? Furthermore, the industry believes that they place it in a very difficult position in international trading. Therefore, will the hon. Gentleman have further consultations with the industry to see whether the regulations need amending in any way?

Mr. Fraser: I am aware of the representations made by the association, although they have not included me. I do not agree that the regulations are obscure. What my Department did was to issue administrative guidance listing standards which in its view offered the degree of safety required by the regulations. In this way we have conferred a kind of non-statutory, deemed-to-satisfy status on the listed standards. I would be willing to listen to the association's representations.

Mr. Rooker: Will my hon. Friend confirm that citizens will not be required shortly to change all their plugs and sockets in line with international proposals? It has been estimated that it would cost Birmingham City Council £18 million if it had to change all the plugs and sockets in all its council houses and flats. That is just one example.

Mr. Fraser: I can confirm that that will not happen shortly. I am not sure that it will happen at all.

Mr. Hal Miller: Will the Minister ensure that in future a greater attempt is made to base any new regulations on already accepted standards or to revise those standards with the agreement of all concerned in the industry before imposing regulations, to allow time for manufacturers to adjust their production?

Mr. Fraser: I am fully aware of the difficulty of manufacturers. The lead times given by the regulations took account of their difficulties. But I do not have statutory authority now to make regulations by reference directly to standards. We are consulting about the possibility of this happening in the future.

British Standards Institution (Advisory Committee)

Mr. Montgomery: asked the Secretary of State for Prices and Consumer Protection if he is satisfied with consumer representation on the British Standards Institution's Consumer Standards Advisory Committee.

Mr. John Fraser: Representation on the British Standards Institution's Consumer Standards Advisory Committee is a matter for the institution, in accordance with its charter and byelaws.

Mr. Montgomery: Is the Electrical Association for Women, which has always been represented on this committee, to be represented on the new body? If not, why not? Why does it appear as though the committee is to be made up of Government-dominated and sponsored bodies? Is that in the interests of the consumer?

Mr. Fraser: I do not think that the premise in the second part of the hon. Gentleman's supplementary question is correct. The first part of the supplementary question is a matter for the British Standards Institution and not for me.

Price Code

Mr. Silvester: asked the Secretary of State for Prices and Consumer Protection if he will make a statement on his latest plans for renegotiating the Price Code.

Mr. Hattersley: I am considering what form prices policy should take after the powers to enforce the Price Code expire on 31st July. I hope soon to be in a position to give details.

Mr. Silvester: Will the right hon. Gentleman confirm that it is not his intention, in any proposed agency that he may set up, to give wide discretionary powers that may lead to delay in manufacturing plans?

Mr. Hattersley: The hon. Gentleman must await my announcement rather than ask questions based on hypotheses like that.

Mr. Skinner: Is my right hon. Friend aware that in its latest report the Price Commission refers to the fact that it is unable to comment on the question of profit margins? Will he, in any further discussions, ensure that the Commission is able to state precisely where it stands on such matters?

Mr. Hattersley: I shall examine what my hon. Friend has said, but I find it difficult to comment now, since our price control policy is so concerned with margins that I do not understand how his supplementary question relates to the report or to what we have been doing.

Mr. Budgen: Is not the Chancellor of the Exchequer attempting to halt inflation

by monetary control? If that is the Government's policy, will the Secretary of State confirm that there is no need for either wage or price control now?

Mr. Hattersley: My right hon. Friend the Chancellor of the Exchequer was explicit, when he spoke on 31st January, in saying that an element of monetary control was an essential feature in overall economic policy, but I do not think that any sensible person believes that that alone can put the economy right.

Mrs. Wise: In addition to the point made by my hon. Friend the Member for Bolsover (Mr. Skinner), is my right hon. Friend aware that the Price Commission, in its latest report, also says that the calculation of profits for price control purposes is now highly artificial and bears little resemblance to profits as calculated on accepted accounting principles? Will my right hon. Friend comment on that aspect and on what use fictitious profits are?

Mr. Hattersley: As I understand the point made by the Price Commission, it was suggesting that the Sandilands Report and what it reveals perhaps sometimes demonstrate that companies are not making as much profit as a superficial reading of their accounts would suggest. But the substance of my hon. Friend's supplementary question is in a sense right, in that one of the things wrong with the Price Code is that it attempts to create a view of profits when perhaps a different view could be of more use. Perhaps we should be more sophisticated about their level, the reasons for them, and what they are used for.

Mr. GilesShaw: Before any renegotiation of the Price Code, will the right hon. Gentleman bear in mind that in only nine cases has it been necessary for the Price Commission to act against manufacturers in support of the code and that following the voluntary principle in negotiating the next phase is the only way to proceed?

Mr. Hattersley: That point could be argued both ways. One could say that only on a few occasions did the Price Commission choose to act. One could say, alternatively, that only on a few occasions did the Price Code allow it to act. We have to strike a balance between the


two concepts, so that the Price Commission, or what follows it, can act when action is necessary. I am afraid that I cannot give the criteria for that today.

Investment Relief

Mr. Rooker: asked the Secretary of State for Prices and Consumer Protection what is his estimate of relief given under the Price Code for investment in the past 12 months.

Mr. Maclennan: In the 12 months to November 1976, the Price Commission dealt with claims worth more than £700 million and covering investment expenditure worth about £2,000 million. However, the constraints of the market will have reduced the extent to which claims for investment relief are taken up. Not all of the £700 million will therefore have been reflected in higher prices.

Mr. Rooker: Does my hon. Friend accept, bearing in mind that category 1 companies have probably paid next to nothing in corporation tax last year and this year, that his figures show that little has gone into investment and new jobs by way of relief under the Price Code? Has not the time come when trade unions and others who suffer as a result of loss of jobs should have a say in how the margins and investment relief are used, so that jobs are created? Should not the task be given to the Manpower Services Commission rather than the Price Commission?

Mr. Maclennan: The relief can be claimed only on proof that investment is being made, and the Price Commission monitors this very carefully in order to ensure that the investment has occurred. If it has not, reductions in prices can be required.

Nationalised Industries (Goods and Services)

Mr. Adley: asked the Secretary of State for Prices and Consumer Protection what is his consumer protection policy towards goods and services supplied by nationalised industries or organs of central Government.

Mr. John Fraser: My Department set up the National Consumer Council to represent all consumers, including those of all public sector goods and services. In addition, I am currently examining

ways in which the consumer may be most effectively represented by the nationalised industry consumer councils.

Mr. Adley: I thank the hon. Gentleman for that reply. Does he agree that goods and services, such as whooping-cough vaccines, supplied or made available through the National Health Service should be subject to the same laws of consumer protection as are goods and services provided to the public by commercial organisations?

Mr. Fraser: I think that the answer is that they are subject to the same laws, but normal medicines supplied through the National Health Service are not supplied under contract, and liability against a manufacturer lies in tort. It is a difference of supply rather than of law.

Mr. loan Evans: Rather than having separate consumer committees for the gas, coal, electricity and oil industries, why not bring them together and have an energy consumers' consultative committee, whereby consumers can look at the energy supply as a whole and make comparisons between the different industries?

Mr. Fraser: There might be something useful in consumers being able to look generally at energy problems, but if one brought all these organisations into a single body I think that it would diminish the effect of consumer representation in the regions. I think that there is enough work to do in looking at each industry.

Mr. Adley: Where there is a contract between a manufacturer of whooping-cough vaccine and the National Health Service, and the NHS is, under its auspices, supplying the general public, contrary to what the hon. Gentleman has told me, is there not a contract of supply between the two parties?

Mr. Fraser: I hope that the hon. Gentleman will accept this. I think that I would be unwise, at Question Time, to try to give a legal opinion about liability. If the hon. Gentleman writes to me to discuss the matter further, I am only too willing to do so.

Mr. Madden: Can my hon. Friend think of any publicly-owned industry in the last year which has accepted any


recommendation made by a consumer council?

Mr. Fraser: Yes. There have been a good many cases.

Metrication

Mr. Robert Edwards: asked the Secretary of State for Prices and Consumer Protection when he will make a statement about further progress in metrication.

Mr. John Fraser: As I said in reply to the hon. Member for Macclesfield (Mr. Winterton) on 20th January, I hope to make a report to Parliament on the subject of metrication before Easter.

Mr. Edwards: I thank my hon. Friend for that reply. Does not he agree, however, that it is rather a negative one? Is there any programme for phasing out imperial measures? What steps is he taking to protect the consumer from having to shoulder the whole burden of the cost of this transformation?

Mr. Fraser: I am sorry that my reply was somewhat negative. I undertook, on Second Reading of the Weights and Measures Bill, to have as much consultation as possible and to link the process of metrication as closely as possible to consumer protection. That process is going on, and I hope before Easter to publish in tentative form the results of the consultations so that I can be guided by the House and by opinion outside as to the pace of metrication.

Sir John Hall: As the hon. Gentleman has now had some experience of conversion to metrication, can he estimate how much it will cost the nation?

Mr. Fraser: It has not been possible in any country to estimate the total cost of going metric, but I believe that in the long term there is a benefit and not a cost.

Mr. Raphael Tuck: When we went decimal, many peeple were done out of a lot of money. Can my hon. Friend give an assurance that the same thing will not happen when going metric?

Mr. Fraser: I do not want to reflect on decimalisation, but I can give an assurance that I shall monitor very closely any changes to metric quantities to ensure

both the maximum degree of consumer protection and that during the change metrication does not fall into disrepute.

Accidents in the Home

Mr. Arnold Shaw: asked the Secretary of State for Prices and Consumer Protection what steps are being taken to reduce the toll of accidents in the home.

Mr. John Fraser: My Department promotes home safety publicity, makes regulations when necessary relating to the safety of consumer goods, undertakes relevant research, and participates in the preparation of safety standards. In addition, we are carrying out a comprehensive review of existing consumer safety legislation and have set up the national home accident surveillance system based on data from 20 hospitals.

Mr. Shaw: I spoke of the measures that have been taken. Does my hon. Friend agree that a large proportion of accidents happen in the home, especially among elderly people? Will he consider introducing an imaginative campaign, perhaps on television, directed at this sector?

Mr. Fraser: It is true that between 6,000 and 7,000 people die in accidents in the home each year. My Department already provides films for television, tapes for radio and other forms of information to try to prevent these accidents. One of the purposes of the accident surveillance system is to determine those circumstances in which accidents are most likely to happen and then, by legislative change or educative material, to reduce the incidence of these tragedies.

Mr. Fairbairn: Before the Minister introduces legislation to prevent accidents of one sort or another—[Interruption.] With a question I might smother the rubbish that is coming from some. Before the hon. Gentleman introduces legislation to prevent accidents, will he consider the cost per accident that such legislation imposes? Does he agree that we are getting into a state in which we are attempting to control all human behaviour against all possibilities by legislation that imposes impossible costs and bounds on ordinary activity in trade, commerce and domestic life?

Mr. Fraser: If between 6,000 and 7,000 people a year die in accidents in the home, it is worth while using a bit of


law and a bit of expense to try to prevent those fatalities. I have never pretended that we can regulate human behaviour by law. It is sometimes a matter of persuasion and sometimes a matter of education It is by a combination of those approaches that we hope to prevent this sort of accident.

CHANCELLOR OF THE DUCHY OF LANCASTER (ENGAGEMENTS)

Mr. Rost: asked the Chancellor of the Duchy of Lancaster if he will list his engagements for 7th February.

The Chancellor of the Duchy of Lancaster (Mr. Harold Lever): Apart from my duties in this House, I have meetings today with ministerial colleagues and others; in addition, I am being interviewed on television this evening.

Mr. Rost: As the Chancellor's only important duty would appear to be to answer Questions in the House, will he tell us whether it was his idea to sell the Government's 20 per cent. stake in BP as part of the IMF contract? Will he confirm that it is still the Government's intention to go ahead with that agreement? If it is not, does he intend to resign?

Mr. Lever: The hon. Gentleman must know that this is a place where we discuss not ideas of the Government but decisions of the Government. This was a collective decision of the Government and it remains their intention to go ahead with the sale.

Mr. Skinner: Does my right hon. Friend know of the recent reports that have been circulating to the effect that the Secretary of State for Energy is now talking in terms—privately, perhaps—of not selling off the 20 per cent. stake in BP? As we are supposed to be moving into a much rosier economic situation—that is what we are told—does my right hon. Friend agree with what the Secretary of State for Energy is privately suggesting?

Mr. Lever: Obviously my hon. Friend has a closer relation with my right hon. Friend the Secretary of State for Energy and his private confidences on this matter than I have. My right hon. Friend has not discussed this with me. It would be

foolish to treat this as some fundamental plank of the covenant—namely, whether we should sell it off. Although this was announced by the Chancellor of the Exchequer as our intention, it is not completely irrevocable. It is a matter that can be considered and discussed. The question would be better directed to my right hon. Friend the Chancellor of the Exchequer.

Mr. Hal Miller: Will the right hon. Gentleman find time today to talk to the shop stewards and other employees of the Small Heath and Wolverhampton works of the Norton motor cycle factory and explain to them whether he will come in on his charger to provide funds and expertise to rescue them from the damage imposed on them by the support given to the experiment at the co-operative at Meriden?

Mr. Lever: I do not undertake to maintain the close, continuous and intimate contact with grass-roots shop steward activity that the hon. Gentleman evinces by his question. I am not sure where it is and whether those concerned wish to see me. If they do wish to see me—and without any question, like any other citizen, they have their channel for doing so—I suspect that it will not be the hon. Gentleman who will be the agency for bringing that about.

Mr. Heffer: I understand that, like myself, my right hon. Friend will be addressing tomorrow's International Bankers Conference. I do not know why I am addressing the conference. I shall be defending and supporting the Labour Party's policy of public ownership of the three major clearing banks and the seven major insurance companies. Will my right hon. Friend indicate whether he will be giving me support on that matter in his speech?

Mr. Lever: I am as reluctant to anticipate tomorrow's speech to the bankers as the Chancellor of the Exchequer is reluctant to anticipate his Budget Statement. It is reassuring to me, as well as enjoyable, to find myself in such reputable company as that of my hon. Friend. I must tell him, however, that he is unlikely to find any enthusiasm evinced by me on the subject of nationalising the banks that would be regarded as being closely in harmony with the views that have been expressed by the National


Executive. In all my speeches I shall do my best to maintain collective responsibility for defending Government policy on this and all other issues.

Mr. Hal Miller: On a point of order, Mr. Speaker—

Mr. Speaker: Does the hon. Gentleman mind waiting until after Questions? That will not be long now.

Later—

Mr. Hal Miller: On a point of order, Mr. Speaker. Will you explain to me what protection I have against the vulgar ignorance of the Chancellor of the Duchy, who imputed that representations would not be put to him through me? Two Wolverhampton shop stewards, who are my constituents, rang me up about this matter.

Mr. Lever: Further to that point of order, Mr. Speaker, I hope that the hon. Gentleman did not imagine that I was saying that representations could not in any circumstances come through him. I said that if they wanted to see me, probably they would find a more direct and convenient agency than himself.

Mr. Hal Miller: I attempt to represent my constituents—[Interruption.]

Mr. Speaker: Order. Everyone knows that we all represent everyone in our constituencies.

INTERNATIONAL MONETARY FUND (MANAGING DIRECTOR)

Mr. Gow: asked the Chancellor of the Duchy of Lancaster when he last met the Managing Director of the International Monetary Fund.

Mr. Lever: I have not had the pleasure of meeting Dr. Witteveen since he took up his present appointment.

Mr. Gow: Has the Chancellor of the Duchy received any communication on the ideas of Dr. Witteveen about the share of the nation's resources taken by public expenditure in this country? Is he aware that, whatever his knowledge of the views of the Managing Director of the IMF, we on the Opposition Benches warmly welcome the Government's new commitment to reduce the share of the

nation's resources taken by public expenditure?

Mr. Lever: It is good to have the hon. Gentleman's welcome for almost any action taken by the Government. I shall not scrutinise too closely whether his welcome and what the Government are doing have that relationship with each other that might be even more comforting. The hon. Gentleman must be aware that the Government's policy on expenditure and all other matters has, so far as is relevant, been firmly approved by the International Monetary Fund and Dr. Witteveen.

Mr. George Rodgers: Is my right hon. Friend aware that the recent riots and bloodshed in Egypt following increased food prices followed a visit by representatives of the IMF? Is he aware that it is considered that the increase in food prices was a direct consequence of the Fund's visit? Will my right hon. Friend he cautious in his association with such dangerous people?

Mr. Lever: I have noted the conjunction of circumstances to which my hon. Friend draws the attention of the House. It may well have an interesting significance for each and every one of us to ponder. I can only say that there has been no evidence of similar incidents in this country after the visit of the Fund. The Fund is composed only of human beings. It has not descended from the heavens with authority to determine with total wisdom every issue that every Government have to decide. At the end of the day the British Government must take full responsibility for their own decisions and must judge them to be the right ones. I hope that that will always be so.

DUCHY OF LANCASTER

Mr. Canavan: asked the Chancellor of the Duchy of Lancaster how many official visits he has made to the Duchy of Lancaster since the became Chancellor.

Mr. Lever: Like other Chancellors, I have to carry out the large part of my Duchy responsibilities from London. However, I visited the Yorkshire estates of the Duchy, in my capacity as Chancellor, in 1975. I of course


regularly make other visits to the Duchy.

Mr. Canavan: Before my right hon. Friend's next visit to the Duchy, may we look forward to an announcement that the Government will assist the Meriden Co-operative to buy the NVT marketing system? In view of the success of the Meriden Co-operative not just in saving jobs but in extending industrial democracy and in increasing production compared with when it was a private enterprise, will the Government encourage other industrial co-operatives through agencies such as the National Enterprise Board and the Scottish and Welsh Development Agencies?

Mr. Lever: My right hon. Friend the Secretary of State for Industry is and has been continuously in charge of the Meriden operation. My own appearance on that scene was at his express invitation, personally, and within the policy purposes laid down by him. Therefore, if any statement is to be made on the subject, it must be made, rightly, by my right hon. Friend and, who knows, at some time in the not-too-distant future he may catch Mr. Speaker's eye on the subject.

Mr. Grylls: As the Chancellor of the Duchy deals primarily with financial matters, does he agree with the statement by the Governor of the Bank of England that the amount of foreign aid to be repaid by Britain between now and 1985 is about £20 billion?

Mr. Lever: It would be unfair for me to enter into any mathematical disputation on this subject, given the limited time at our disposal. However, I am very happy to discuss it with the hon. Gentleman. I might point out to him that the Governor's statement cannot necessarily be taken to be comprehensive in its direct implications. There are glosses, shades and analyses which could usefully be made on that statement.

PRESIDENT CARTER (ECONOMIC ADVISERS)

Mr. Tim Renton: asked the Chancellor of the Duchy of Lancaster when, in his capacity as economic adviser to Her Majesty's Government, he proposes to meet with President Carter's economic advisers.

Mr. Lever: I had the pleasure of meeting Vice-President Mondale and some of President Carter's leading economic advisers during their recent visit to the United Kingdom.

Mr. Renton: Is the right hon. Gentleman aware from those talks—I am sure that he is—of the close linkage in the free enterprise American economy between low interest rates and a low inflation rate? Is he concerned that once the benefits of North Sea oil start gushing into the Treasury, the restraints on domestic credit expansion imposed by the IMF will be lifted and that his Government will once again indulge in the inflationary antics of the past two years?

Mr. Lever: I am not certain that I accept that the pipeline from the North Sea has as its terminal Her Majesty's Treasury, but I am aware that it is of the greatest importance, if we are to get interest rates down—as we must, and it is the Government's policy to bring it about—that we bring inflation under much firmer control. We are determined to do this, and I think that the Government's policy shows great promise—though, admittedly, it requires a great amount of patience—of getting to that goal.

Mr. Ioan Evans: Does my right hon. Friend realise that President Carter fought on a Democrat ticket to increase public expenditure, to reduce unemployment and to cut back on defence expenditure? These are the policies which many Labour Back Benchers have been advocating to this Government. Will my right hon. Friend get together with the President's economic advisers to try to get the world out of the international recession that we see at present?

Mr. Lever: Without claiming that the Democratic Party is affiliated to the Labour Party, I agree that the policies of the victorious Democrat President appear to be much more related to those of the Labour Party than to those of the Tory Party. The broad ideas that my hon. Friend has expressed are very much in my mind and, I am glad to say, are firmly in the minds of the American President, the Vice-President and all the leading advisers whom I have met.

Mr. Rost: When the right hon. Gentleman meets the American economic


advisers, will he be able to persuade them that he is as experienced in repaying the huge debts with which he has lumbered us as he has been in incurring them?

Mr. Lever: The hon. Gentleman shows a vulgar ignorance in suggesting that I incurred the debt or that it will fall to me to repay the debt—

Mr. Rost: The right hon. Gentleman was the Government's adviser.

Mr. Lever: The hon. Gentleman seems anxious to imply by his question that there is some dubiety about whether the British Government, whatever their political complexion at the time, will honour the debts that they have incurred. It should be borne in mind that this country has never defaulted on its obligations and debts, and in my judgment there is not the slightest possibility of their ever doing so.

Mr. Heffer: In view of the fact that my right hon. Friend seemed to indicate that the American Government were in line with the thinking of the Labour Party, will he adopt the views of the present American Administration about developing a public works programme, for which many of us have been asking for some time, as one of the ways of bringing down unemployment?

Mr. Lever: I hope that my hon. Friend will bear in mind that he overstates the identity of the American President's views with those of the British Cabinet. He seems to be overstating even more the identity of circumstances that prevail and the situation generally that prevails in the United States with those in our own country. There is no special reason to initiate public works in Britain to parallel those in the Unted States. I was claiming that the broad outlook indicated by my hon. Friend in his previous supplementary question was very much my own outlook and very much the outlook of the President and all his senior advisers.

Mr. Prior: When the right hon. Gentleman next sees American officials, or even the United States President, will he put right the impression that he gave on his last visit to Washington, when he told the Americans that, in his view, unless the IMF loan was granted the Labour Government would fall and that no other

Government could get on with the trade unions? Will he make it clear that this was a totally false and erroneous impression and that he had no right to give it?

Mr. Lever: I think that the House would be wise not to treat the right hon. Gentleman's slightly paranoid hallucinations as if they were a totaly accurate account of what I said. Unfortunately, they bear little relation to what I said. Again, they represent a kind of vulgar demagogic assumption that is not based on reality. If the right hon. Gentleman really believes that negotiations at a high international level are conducted on that naive basis, he had better reflect a little longer on the matter.

Mr. Skinner: Is my right hon. Friend aware that the right hon. Member for Lowestoft (Mr. Prior), in another capacity as consultant to Trust House Forte Hotels, is attempting to stop trade unionists from becoming members of the T & GWU? How does my right hon. Friend view the right hon. Gentleman's challenge to him on this matter, when he is being paid very highly to prevent people becoming members of a trade union?

Mr. Lever: I follow the activities of the right hon. Member for Lowestoft (Mr. Prior) with as little closeness as he appears to have been following mine. Therefore, I am unable to express any view on my hon. Friend's question. I make it clear, however, that in my indignant rebuttal of the posture attributed to me in the United States I was not challenging the implication that the right hon. Gentleman and his right hon. and hon. Friend's would not be able to run this country with any satisfaction to the ordinary people of the country.

Mr. Prior: Is the right hon. Gentleman saying that he believes that the average person in this country is satisfied with a record of 1·5 million people unemployed and a state of affairs in which, in the three years of this Government, the standard of living has been eroded?

Mr. Lever: Oddly enough, if the right hon. Gentleman had listened to me he would have realised that I was not expressing any opinion or estimate about what ordinary people thought of us; I was saying what I thought they thought of him and his colleagues.

POST OFFICE MAIL (EAST LONDON)

Mr. Tebbit: Mr. Tebbit (by Private Notice) asked the Secretary of State for Industry if he will make a statement on the Post Office dispute preventing normal delivery of mail in London postal districts El to E18.

The Secretary of State for Industry (Mr. Eric G. Varley): I understand from the Post Office that some staff in the El district of London are taking unofficial action which affects mail through the El to E18 districts. The Post Office and the Union of Post Office Workers are seeking a resolution of this dispute.

Mr. Tebbit: What is the Secretary of State doing to assist the resolution of this dispute? Is it not a fact that we have experienced more interruptions in the delivery of mail in the last three years than we experienced in the previous one and a quarter centuries of efficient delivery of mail by the Post Office?

Mr. Skinner: Cut out the cliches.

Mr. Tebbit: Even a cliche is acceptable if it is true. Would the Secretary of State join me in telling Mr. Jackson that he would be better advised to attend to the affairs of his own union and ensure that mail is delivered to my constituents and other people in East London than to parade his conscience about stopping the mail from being delivered to people in South Africa?

Mr. Varley: I thought that there was something behind the mischievousness of the hon. Member for Chingford (Mr. Tebbit) and he has just outlined it to the House. He is not concerned with the mail in El.

Mr. Tebbit: That is a lie and the right hon. Gentleman is a liar.

Hon. Members: Withdraw.

Mr. Varley: The only thing the hon. Member wants to do is to get back to the dispute, which is still a subject for the courts. I hope that instead of parading this vendetta against the Union of Post Office Workers he will realise that Mr. Tom Jackson and his colleagues are doing everything they can to bring this dispute to an end.

Mr. Speaker: Order. I shall take one question from each side on this statement as there is a major statement to follow. I did not hear anything that happened in between.

The Chancellor of the Duchy of Lancaster (Mr. Harold Lever): That is just as well, Mr. Speaker.

Mr. Mikardo: Would my right hon. Friend accept that Mr. Jackson will have a much better chance of reaching a settlement of this dispute with the Post Office if he is not burdened with the sort of comments that we have heard from the hon. Member for Chingford (Mr. Tebbit)?

Mr. Varley: I agree entirely. The hon. Member already has been characterised as one of the most abusive Members of this House. Today he has underlined that totally.

Mr. Rost: Would the Secretary of State enlighten the House by telling us what this dispute is about? Would he answer the question of my hon. Friend the Member for Chingford (Mr. Tebbit) and tell us what he intends to do about it?

Mr. Varley: It would not be appropriate for me to intervene directly when the Post Office Corporation itself and the Union of Post Office Workers are doing everything possible to bring the dispute to a conclusion. [HON. MEMBERS "What is it about?"] I understand from the Post Office that the dispute concerns proposals to cut down overtime by recruiting staff. The Post Office is having discussions with the Union of Post Office Workers, and I am sure that the hon. Member will join with me in hoping that the dispute will end as quickly as possible.

Mr. Speaker: Order. A moment ago I said that I would take only one question from each side. I propose to take two from each side. I have my own very good reasons for this change of mind.

Mr. Spearing: My constituents are in E13 and E16. Would my right hon. Friend tell the House whether the original dispute was official or unofficial and whether the rearrangement of overtime is restricted only to the El office, which


serves the rest of the eastern area, or whether it is common to other parts of London?

Mr. Varley: I think—I am not certain about this but I shall check it out and let my hon. Friend know later—that this dispute is unofficial and affects only the El district. But of course the impact goes right through to the E18 district.

Mr. Pardoe: I declare an interest in that I am a director of a company that currently has many hundreds of thousands of export documentations tied up in the dispute. May I assure the Secretary of State that my interest is only to get the post moving again? Is there any hope in his Department that this dispute can be settled quickly? Is there anything that any Government authority can do to expedite a settlement?

Mr. Varley: Not at this stage. I do not think that there is any action that I can take as Secretary of State that will bring about an earlier resolution of the dispute than the action already being taken by the Post Office Corporation and the Union of Post Office Workers. I know that both bodies are very anxious to bring the dispute to an end as quickly as possible so that the mail can move normally.

Mr. Canavan: On a point of order Mr. Speaker. I distinctly heard the hon. Member for Chingford (Mr. Tebbit) refer to the Secretary of State as a liar. Would it not be better to ask the hon. Member to exclude himself from the House until he learns how to behave?

Mr. Speaker: If such an expression were used, it must be withdrawn of course. Did the hon. Member for Chingford (Mr. Tebbit) use that expression? If so, will he withdraw?

Mr. Tebbit: Out of deference to you, Mr. Speaker, the House and the Secretary of State, I withdraw the expression that I used. It was wrung from me by the type of expression that the Secretary of State uses increasingly and by his attitude that any criticism of him is—

Mr. Speaker: Order. Once a statement has been withdrawn, it is withdrawn.

MERIDEN MOTOR CYCLE CO-OPERATIVE

The Secretary of State for Industry (Mr. Eric G. Varley): With permission, Mr. Speaker, I will make a statement about the Meriden Motor Cycle Co-operative.
On 10th January I told the House that, whilst the Government had turned down the application for assistance from the co-operative in the form in which it presented it shortly before Christmas, we were exploring other possibilities; and I had asked my right hon. Friends the Chancellor of the Duchy of Lancaster and the Minister of State, Department of Industry to undertake a study of the possibilities of keeping the co-operative in being.
I am now able to tell the House that, as the result of a helpful proposal from the General Electric Company, they have been able to come forward with a scheme to do just that. The co-operative will improve its cash resources through having available up to £1 million from GEC, which will take over motor cycles until they are sold and will also provide some technical assistance and some management and marketing advice. The Government welcome this company's willingness to assist the continuation of this important experiment in industrial organisation.
For their part, the Government recognise that the co-operative is handicapped by its lack of a marketing organisation under its own control. The Government have therefore decided, subject to the approval of the House and to the completion of the appropriate arrangements, to provide the co-operative with up to £½ million to purchase the marketing organisation and related assets from Norton Villiers Triumph Ltd. The price to be paid for the organisation and assets will be subject to valuation. In turn NVT is prepared in principle, and subject to the necessary legal requirements, to return the money to the Government as soon as possible as payment for the redemption of an equivalent value of its preference shares held by my Department.
The Government will also defer interest payments due from the co-operative in


the period up to 31st December 1978 and subordinate this and the existing Government investment to all other creditors of the co-operative. My right hon. Friend the Secretary of State for Trade is instructing the Export Credits Guarantee Department to transfer the existing £6 million facility for Meriden motor cycles from NVT to the co-operative.
On the production side the co-operative has made a promising start, but it has not yet been able to demonstrate its ability to create the necessary conditions for long-term viability without further support from public funds. The Government believe that this valuable and interesting experiment should be given a fair opportunity to demonstrate this, and the scheme worked out by my right hon. Friends with the help of GEC should help to provide that opportunity. For its part, the co-operative has told me that the scheme will provide it with an opportunity to determine its own success and offers an adequate basis to tackle the immediate future.
I am pleased to say that Lord Stokes has agreed to act as a consultant to the co-operative on North American and other international sales.
The Industrial Development Advisory Board has considered the scheme and has advised that on balance, recognising the inherent risks, the proposals merit support provided that the Government's commitment is strictly limited. I shall bring the necessary motion under Section 8 of the Industry Act 1972 before the House for approval as soon as possible, and that will provide opportunity for detailed discussion of the scheme.

Mr. Biffen: Is the right hon. Gentleman aware that we on these Benches believe that there are circumstances in which worker co-operatives and industrial common ownership can be wholly consistent with the principles of a market economy? Therefore, does he realise that there is much fascination that Sir Arnold Weinstock, an unabashed apostle of capitalism, should be providing support for the Meriden Co-operative? Can the Secretary of State indicate what considerations led Sir Arnold to provide support which the Department of Industry was unwilling to provide in December?
What is the cost of deferring the interest payments in respect of funds loaned to

the co-operative to 31st December 1978? Does the right hon. Gentleman recall that on 10th January the Opposition indicated that their reaction to the investment of further public funds would be substantially influenced by the comments of the Industrial Development Advisory Board? Will he, therefore, indicate how the Government intend to ensure that they comply with the advice of the Board that their commitment should be strictly limited? Finally, is he aware how much we will welcome an opportunity for detailed discussion of the scheme when the motion is presented to the House?

Mr. Varley: As the hon. Member acknowledges, many of his questions will be covered at greater length when we have what I hope will be an early opportunity of debating the motion. I think that the commitment by GEC arises out of the real progress that it believes that the co-operative has made, which I acknowledged on behalf of the Government in my statement on 10th January. I think that the new factor in all this is that GEC will be able to help the co-operative financially. It will be a sales partner. It is equipped to deal with the various technical and marketing problems. It is well known, of course, that NVT was anxious to break the marketing link, while the co-operative was very anxious to have it. On the specific question about the deferred interest, I can tell the hon. Gentleman that it will be deferred up to the end of 1978. That means deferring five instalments, and they would amount to £1·05 million.

Mr. Robinson: Is my right hon. Friend aware that his statement will be greeted with widespread satisfaction in most parts of the House? Is he further aware that this has been a most difficult negotiation? We express our thanks to his Department, but I am sure that my right hon. Friend will feel it appropriate to pay tribute also once again to the financial ingenunity and the intellectual brilliance of my right hon. Friend the Chancellor of the Duchy of Lancaster. Certain of these characteristics may be shared by another gentleman who is helping in this matter, unlike a certain studiously offensive Member on the Opposition Benches.
Is my right hon. Friend aware that we feel that the co-operative deserves this further support to enable it to acquire what


it vitally needed—and what any business vitally needs namely, control of its own selling? Is he aware that we shall tackle the tasks ahead of us with the same vigour and determination to succeed as we tackled the negotiation we have just come through? May I finally pay tribute to the men of Meriden, who have pushed up productivity by 50 per cent. since they took over the business and who are confounding their critics by having done that and having secured other achievements?

Mr. Varley: My hon. Friend asks me to confirm that my right hon. Friend the Chancellor of the Duchy played an important part in these negotiations. I acknowledge that. On behalf of my Department I should like to thank my right hon. Friend for what he did, along with thanking my right hon. Friend the Minister of State. These have been difficult negotiations. My hon. Friend the Member for Coventry, North-West (Mr. Robinson) has also played his part in all this. We hope that as a result of these new arrangements the co-operative will be able to succeed.
My hon. Friend is right. Since the co-operative came into existance there has been great flexibility in the internal utilisation of labour. Productivity has increased by more than 50 per cent. I think that this new opportunity will give the co-operative the sort of assistance and support that perhaps some of us thought it should have had from the beginning.

Mr. Eyre: Is the right hon. Gentleman aware that any enterprise which seeks to achieve production and to win exports and profits on a competitive basis is to be welcomed, particularly in the dire state of unemployment today in the West Midlands? Does he agree that the latest development at Meriden emphasises that productive effort is dependent upon marketing, business and similar entrepreneurial skills if it is to succeed in world markets? Would it not have been better for the Minister to take adequately into account those points when they were put to him in the summer of 1975?

Mr. Varley: They were taken into account in the summer of 1975. I agree with the hon. Gentleman that the success of any enterprise depends upon marketing, design and products and upon

whether those products will sell in world markets. I hope that the new arrangements that have been entered into will allow the co-operative not only to succeed but to expand.

Mrs. Wise: Were not the troubles of the motor cycle industry originally caused by capitalism, private financiers and their frequent bad management? Has not the industry been rescued by the efforts of the workers? Is my right hon. Friend aware that many hon. Members are concerned that this new agreement might put those workers back into the clutches of private capitalism, and will he confirm that that will not happen? Will he tell the GEC that it would be advisable for it to show concern for the welfare of its workers and to use some of its substantial profits for the welfare of those workers, many of whom are my constituents, as are many of the Meriden workers?

Mr. Varley: I want to make it absolutely plain that the Government welcome the involvement of GEC in the enterprise, and so do all the workers at the co-operative. They accept the problems of involvement. My hon. Friend referred to the history of the industry and said that its problems resulted from the failure of capitalism. When the Government looked at the motor cycle industry in 1975 and asked the Boston Consulting Group to look into it, the consultants confirmed that a lack of investment and the pursuit of short-term profits had helped to bring about the situation in the industry.

Mr. Hal Miller: Will the Secretary of State tell the House what conclusions were reached in the report made by my right hon. and hon. Friends about new motor cycle design by the Meriden Co-operative, in view of the age and imperfections of the Bonneville design? Cannot the Minister understand the feelings of workers at Small Heath and Wolverhampton who believed that they had a motor cycle of a superior design for which the Government were unwilling to give assistance?

Mr. Varley: The long-term success of any enterprise depends upon marketing, the product and product design. The importance of a new design for the future is very much in the mind of the co-operative, but it is for the co-operative to decide how to proceed. I am not in


a position to compare the relative designs of the Bonneville and the Norton that was being manufactured in 1975 at Small Heath and Wolverhampton. It would not be appropriate for me to comment.

Mr. Pardoe: Is not the hon. Member for Oswestry (Mr. Biffen) too cynical by half? Is the Minister aware that some of us are grateful to Sir Arnold Weinstock, GEC and Lord Stokes for the help they have given? Has not Meriden been a success story so far, and does it not offer better hope for future equality between capital and labour than even the Bullock Report? Will the Minister say something more about the necessary conditions for long-term viability, because the long-term viability of Meriden and the motor cycle industry cannot depend upon the Bonneville—which is a marvellous bike—but depends upon the industry producing new bicycles? Is the Minister confident that finance will be made available to enable the co-operative to develop new bikes?

Mr. Varley: We have helped the co-operative to acquire marketing assets. The help from GEC will particularly help the co-operative in continuing in business and in manufacting the Bonneville motor cycle. I do not know to what extent the co-operative will be able to update that cycle. The hon. Member for Cornwall, North (Mr. Pardoe) is, however, right in that the long-term success of the co-operative will depend upon its bringing forward at some time proposals for the future. If the Government's advice is sought by the co-operative, we shall be prepared to give it. I can only confirm that so far the co-operative has been a success.

Mr. Speaker: Hon. Members will kindly make their questions brief and not argue the case.

Mr. Ioan Evans: Is my right hon. Friend aware that his statement will be welcomed throughout the country? Will he consider the possibility of giving the National Enterprise Board, and the Scottish and Welsh Development Agencies, power to assist workers' co-operatives? Is it not part of the Labour Party manifesto to set up a co-operative development agency, and could not such an agency have helped in this case?

Mr. Varley: The setting-up of a co-operative development agency is a matter

that concerns many people. The Government have not yet been able to move forward on the lines that my hon. Friend and his colleagues in the Co-operative Party would like, largely because the proposals need further consideration, as does the matter of resources. I hope my hon. Friend will acknowledge that in the support given to the Bill of my hon. Friend the Member for Consett (Mr. Watkins) we made a step in that direction. The Government are anxious to see experiments in workers' co-operatives because, as has been said this afternoon, they are an important experiment in industrial democracy.

Mr. Tebbit: May I, as a friend of the concept of worker-owned enterprises, ask the Secretary of State whether the Lord Stokes to whom he has alluded is the same Lord Stokes who was responsible for the cobbling-up of the British Motor Corporation, which subsequently came grovelling to the Government for substantial sums of money to save it from bankruptcy?

Mr. Varley: It is that kind of question that endears the hon. Member to the House. This Lord Stokes is the same Lord Stokes who came to the Government, and as a result of that the Government were able to take British Leyland into public ownership and save not just 700 jobs—as at Meriden—but hundreds of thousands of jobs in the West Midlands. If Conservatives had been successful in their votes in the House on that matter, the unemployment position in the West Midlands would now be catastrophic.

Mr. Skinner: Is the Minister aware that during the period when the Meriden-Weinstock venture has been taking place there have been some other intriguing aspects arising in the matter? Can he shed any light on the rights issue of £163 million that GEC was recently able to obtain? Can his Department shed any light on the possibility of a connection between the proposed merger, the delay at the Drax B power station and other events in the power station construction industry? Can it be said that the Weinstock involvement in the Meriden affair was a sprat to catch a mackerel?

Mr. Varley: The shares issue and the other matters that my hon. Friend mentioned, such as the heavy electrical power


industry, were not the subject of discussion during talks on the Meriden Workers' Co-operative.

Mr. Speaker: I shall call only those hon. Members who were on their feet when the last questioner was called.

Mr. Rathbone: Since the Secretary of State has paid such well-deserved praise to the need for, and effect of, marketing skills, will he now start talks with the Secretary of State for Prices and Consumer Protection in order to obtain greater relief for the cost of those skills within the Price Code?

Mr. Varley: I am not sure how that question arises out of my statement, and I fear that I might incur Mr. Speaker's wrath if I sought to answer it. When we sought to make certain changes in the Price Code, the Conservative Party, and presumably the hon. Gentleman, voted against us and prevented the changes being made.

Mr. Newens: Bearing in mind the vast amount of money which is paid to private industry, can my right hon. Friend assure us that the Government will continues to give full backing to the Meriden Co-operative and will not allow it to become dependent on private capitalism for its survival? Does not this case show the urgent need for the introduction of a co-operative development agency to provide funds not only for Meriden, but for many other such ventures?

Mr. Varley: My hon. Friend will acknowledge that it is not only a question of funds. Success also depends on having a financially secure sales partner and on marketing, organisation and the management skills involved. As I understand it, GEC will assist in all these activities with the willing co-operation of those who work at Meriden.

Mr. Grylls: Does the right hon. Gentleman recollect the Public Accounts Committee's report which said that the lessons to be learned from the original set-up were the lack of marketing and professional management? Is he satisfied that the new arrangements will fill that obvious need? Will GEC earn commission on motor cycles which it sells?

Mr. Varley: The last point is a matter for commercial discussion between the co-operative and GEC. It is commercially

confidential, and I am sure that the hon. Gentleman will accept that it would be wrong for me to reveal the details. When the co-operative was originally set up, NVT had a large stake in the motor cycle industry and it was thought proper at that time that the marketing arrangements should continue through that organisation. NVT has now ceased motor cycle production and is anxious to relinquish that obligation. The Meriden Co-operative is happy to take it over with the assistance of GEC, and I hope that all goes well.

HOUSE OF COMMONS NOTEPAPER (USE)

Mr. Rooker: On a point of order, Mr. Speaker. I apologise for not rising sooner, but I had given notice of this point of order and I thought that you would call me.
It was anounced at 1 p.m. today that a peer of the realm had used crested House of Commons notepaper to issue a personal statement to the Press. I have been prevented from tabling a Question on the matter, so I wish to ask you whether Members of another place are entitled to a supply of House of Commons notepaper.
The Table Office refused to accept my Question. I wanted to ask whether it was in order for Members of another place so to misuse House of Commons notepaper. Clearly it would be inappropriate for an hon. Member to troop along the Corridor and use House of Lords notepaper, whether to issue personal or unofficial statements. I hope that you will consider this matter.

Mr. Speaker: I apologise to the hon. Member. He gave notice that he wished to raise a point of order, but I overlooked it. Our stationery is for use by hon. Members in this House. I shall, of course, find out what I can about this incident, but I did not hear the statement myself. No doubt others will hear my voice from this place when I say that other people must use their own notepaper.

Mr. Cormack: Further to that point of order, Mr. Speaker. Is it in order to submit an Honours List on lavender paper?

Mr. Speaker: I have never tried it.

EUROPEAN PARLIAMENT (DIRECT ELECTIONS)

4.4 p.m.

Mr. Hugh Dykes: I beg to move,
That this House calls on Her Majesty's Government to fulfil its undertakings to Parliament and to the Community to introduce legislation for the purpose of holding direct elections to the European Parliament; notes that unless this legislation is published forthwith there will be insufficient time for the Boundary Commissioners to complete the necessary work to meet the official target date of May-June 1978; and recalls that failure to bring forward the Bill at the earliest opportunity may prevent such elections taking place in any of the member-states, as provided in the September 1976 Convention to which Her Majesty's Government was a signatory.
It is a great pleasure for me to move this motion, and I hope that hon. Members will consider this the right moment to do so. I hope I shall carry hon. Members with me when I say that this subject is every bit as important as the topic of devolution which is now being considered in Committee. The full implications of direct elections have not been considered by many people outside the House. This is understandable because the elections, as well as the underlying theme of our membership of the Community, still appear somewhat remote to the average citizen.
I wish to submit the case for the Government to press ahead, without further delay, the necessary legislation to prepare for direct elections to the European Parliament. While I am grateful to the Minister of State, Home Office, for being present to reply to the debate, I must register my disappointment that it is not the Home Secretary who is here to deal with the important constitutional matters that will face the House when the subject is deliberated upon in more detail, or the senior Foreign Office spokesman, who has an undoubted and unequivocal personal as well as ministerial commitment to the target date for direct elections and to ensuring that the necessary legislation is introduced as soon as possible.
The antecedents of this issue are well known and I need deal with them only briefly, but I must first express my regret that the debate is taking place, unavoidably, on the first day of a plenary session in Luxembourg when Members of the

European Parliament, who might have wished to take part in this debate, have to be there. Some Labour Members on the Benches opposite might believe that the dual mandate should allow those hon. Members to be here, but I understand that there is important business in Luxembourg tonight which necessitated their catching an early flight.
The draft convention of the European Parliament sensibly pointed out in its explanatory statement in February 1975 that not only was the subject built into the whole thinking, strategy, philosophy and constitution of the Community as something to be aimed at but it was a topic which, for the original Members, was already becoming long overdue.
The practical and homespun rationale for direct elections is not so much the grand design or the development of political institutions within the Community. The draft convention noted:
The increasing problems created by the exercise of a dual mandate merely emphasise the urgency of direct elections.
Since then, we have seen that the work load of indirectly-elected Members is onerous enough to rule out the dual mandate. Today's unavoidable absence of our representatives at the Parliament is an example, and this problem will get worse. I argue not just the respectable doctrine of direct elections but also the increasing practical pressures which make them necessary.
The legal mandate is contained in the European Elections Act which was signed by the Council of Ministers and accompanied by a decision of the Council on 20th September 1976. The preamble to the Act set the target date for elections as May-June 1978. There can be no doubt that that is the official target date. Even though clever lawyers on either side of the argument may discuss the intrinsic legal nature and equality of the decision, the date has been agreed by the Council. The House now faces the obvious problem of meeting the target date with other member States.

Mr. Nigel Spearing: Will the hon. Gentleman give way?

Mr. Dykes: I should prefer not to give way, in view of the relatively short time that we have for this debate. However, perhaps we might see how we get on or


the hon. Gentleman can seek to catch Mr. Speaker's eye to make his point.
Before the Act for direct elections was signed by the Council of Ministers, having been built on the European summit target of the previous year, a Select Committee of the House—and work was also done in the House of Lords—had already urged the Government in its report of 15th June last year to agree in the Council that elections should be held by May-June 1978. The report said that was an attainable date which was totally within the practical compass of the House and the necessary changes that would flow from the legislative decision.
The work of the body that would incorporate the construction of the European constituencies was considered in some detail in the Committee and its subsequent report published on 3rd August. The question of the Boundary Commission doing the minimum of necessary work was raised. The deadline of May 1977 was discussed. It had already been set as the deadline for the enabling Bill, and the Home Office had earlier recommended that date to the Select Committee. That deadline would mean that the Boundary Commission would not necessarily have as much time as normal processes would allow for national elections. The report said:
if the House were to approve their recommendations in principle, it would be necessary for the Government to bring in a Bill in the early days of next Session and for it to complete its passage in both Houses by the end of February".
We are now at the beginning of the second week in February. Hon. Members in all parts of the House and authorities outside felt that the Select Committee was being over-anxious and that more time should be allowed. The matter is becoming out of hand. The Government must do something about it in the near future. I hope that the Home Office Minister will announce today a definitive date for the publication of this long-overdue Bill. Even if the original time table was a little over-anxious, we are seriously running out of time.
The Government repeated their commitment in the Queen's Speech and in their White Paper, Command 6695, "Developments in the European Community",

published in December. That publication contained an unequivocal reiteration of the commitment to direct elections. That is official Government policy, whatever happened at the Labour Party Conference in the autumn. It is also the official policy of the Conservative Opposition and of some other parties in the House. The House has a substantial built-in majority in favour of a direct elections Bill, for the principle behind it and for it to be introduced without further delay.
In the final report of the Select Committee, which was published on 3rd August last year the Boundary Commissioners' evidence appears. On page 5 of the original memorandum the Boundary Commission seemed to be clear on the gravity and on the burden and measure of its task. Paragraph 17(d) of that report states:
if the Boundary Commissions are to make recommendations for the first direct elections, they should be enabled to evaluate the representations received in one month after publishing their provisional recommendations".
The Boundary Commission continues—and this is a serious matter for the House:
'but local inquiries should not be required".
The compromise approach of the Select Committee and other experts on this subject is that some form of local inquiry is needed along the normal lines of the Representation of the People Acts. The opinion is that one local set of inquiries should be sufficient, but that is for the House to decide. That is because the necessary amendment to the Act would allow the Boundary Commission to construct clusters of constituencies without creating new European frontiers but to base them on existing national parliamentary constituencies.
I do not say that that is the right approach, but if it were agreed by the House I imagine that that might allow the Boundary Commission to do the minimum amount of work necessary from start to finish, including all the preliminary work. I say that tentatively. It would allow the Commission to finish its work in between six and eight months—that is a conservative minimum to allow all the necessary evidence to be given and to allay anxieties about undue haste or fears that an acceleration of the official processes had taken place.
If the Minister would announce the end of June as being the date for the introduction of the Bill, the Boundary Comimssion could finish its work by February next year and official preparations could go ahead. I know that that is a short time before the May-June target date, and some hon. Members might argue that it is not long enough. If the Boundary Commission is to do its work, there is a strong case for introducing the Bill now and for not waiting for the Government to resolve differences in the Cabinet or among hon. Members below the Gangway. The Minister of State must bear that in mind.
Another vital point is that I fear that if any further unnecessary—I underline that word—delays are experieced with the Bill, it might be tempting for the Government to say that there is no time for the official processes and that they will therefore make the necessary changes in a schedule attached to the Bill. If that happened, the House of Commons would create its own constituencies. How could the House bear to imagine a Government producing schedules to a Bill along those lines, particularly as hon. Members will recall the gerrymandering of constituency boundaries in 1969? That would be entirely wrong, and the House should not allow it. A collection of politicians would be constructing that which should be constructed outside by an independent body with an arbitrary sense of natural justice. The public would not have the necessary confidence in a structure that would arise from a schedule to a Bill.
That is the background to the situation. If we examine the other member States, we see that other countries are beginning this essential process. For example, the Irish have introduced their Bill, which proposes three European constituencies which reflect their existing parliamentary system—the multi-Member transferable vote system. We should follow their example by proposing a system based on our own first-past-the-post system.
Other member States are beginning their preparations. The Minister of State, Foreign and Commonwealth Office was incorrect when he said that other countries had not yet begun their preparations. I do not have time to read out all the details, but in Italy a Bill is to be published by the end of February and an announcement has been made. A Bill was

published a fortnight ago in Luxembourg. In Holland a Bill has been available for some time and will be passed before Easter. In Denmark a Bill is expected to be published before Easter. The Federal Republic of Germany has published its Bill. There are problems, if any, most of all in Belgium, where there is still somewhat of a great debate going on, but it has nothing to do with the principle of direct elections.
It is a matter of sadness that in this country we see that the whole referendum about European membership is beginning to be opened up again when we should be discussing the next stage.

Mr. Spearing: Federalist!

Mr. Dykes: No, not necessarily. That will remain to be seen in the long-term future. There may be some who would like a federal structure in Europe, but that has nothing to do with the first set of direct elections. Most people would acknowledge that.
However, on the point about other countries—I think I am right in saying that I am looking only at a draft; therefore, one has to exercise caution—on 25th January last, as I mentioned earlier, the Minister of State, Foreign and Commonwealth Office, speaking to the House of Lords European Communities Committee, said
I think I am right in saying no other country has even started a formal, legislative process.
That was questioned, rightly, by Lord Gladwyn, who contradicted it. I wanted to remind the House of that and to repeat it, if only to underline that if there are Ministers at the Foreign Office—we acknowledge that they may have certain personal inclinations on this subject, which I would regard as being in the right direction—who can get matters wrong on this subject at this late stage, it only goes to show the insouciance of the Government and their carelessness about a subject solemnly promised in their own programme and which has not yet appeared although everyone agrees that it is well overdue.
As Baroness Elles rightly said in the other place when speaking in the EEC debate on 15th December, the last such debate that the other place had,
The Government will be aware of the bitter disappointment to those countries which are


actively preparing for these elections and which recognise the necessity for democratic control of the European institutions if we ourselves are not ready by the proposed date. How often were we told that the European countries in the Community, apart from ourselves, looked for guidance and inspiration to the United Kingdom as the home of democracy, with a Parliament and a Parliamentary system which is, or certainly was, the envy of the world. Have we even lost the entitlement to this claim, or are we in danger of losing it? So far as I am aware, other Member States have not expressed any doubt as to their capacity to be ready by May or June 1978."—[Official Report, House of Lords, 15th December 1976; Vol. 378, c. 996.]
The biggest sticking point recently was, of course, in the Republic of France, where perhaps the most severe test case of all—it was an interesting test case for the whole basis and the legal and constitutional rationale of direct elections —was resolved by a sensible and a correct judgment of the Constitutional Court, which, under the constitution of the Fifth Republic, is the final adjudicator on matters which appear under the relevant clauses of the Fifth Republic's constitution—the independence of the constitution, the sovereignty of the French Republic and the independence of the legislative body. The Constitutional Court found, with complete equanimity, I think, that these direct elections were in no way an infringement of the central sovereignty of both Houses of the French Parliament or the French Executive which is written into the French constitution as another arm of the total constitutional body.
Therefore, why the difficulty and the delay? Why are the Government vacillating on this matter when most people calmly and fairly expected the Bill to be introduced early on? February may seem as though there is plenty of time left here, and perhaps it could be March and there would be no problem. I have already tried to suggest that if the full processes were undertaken it would be very difficult indeed if no Bill came by the end of this month at the very latest, and even that would be one, two or three weeks too late.
I return to the Foreign Secretary's position. Is he leading the pro-direct elections lobby in the Cabinet and not succeeding very much? What is the position of the Lord President of the Council, who has let the House down grotesquely on devolution, a Bill that is

already falling apart at its seams? Whatever one's feeling about devolution may be, that is quite clear. Therefore, what is the attitude of the Lord President, who has himself had to enunciate Government policy and say that direct elections are part of their programme and that something will be done? A day or two ago he referred to "problems". He was telling my hon. Friend the Member for Surrey, North-West (Mr. Grylls), at Business Question Time last Thursday, what the form was, and he referred to certain problems still being discussed.
The presence today of the Minister of State, Home Office gives us pleasure to some extent, but it worries me in one particular. That is that if the Home Office, charged with constructing the Bill—incidentally, one has heard that no draft is available, but that may be untrue—is beset by problems affecting, for example, essential adjustments in the Representation of the People Acts, the necessary questions of Government statutes, the status of a European Member of Parliament, the terms and conditions of elections, the length of the election campaign and the legal questions affecting returning officers and so on, why should all that, although one acknowledges its extreme complexity, be allowed to hold up the first target, which is to allow the Boundary Commission to commence its work?
Therefore, that leads me back to the compelling logic expressed by a number of hon. Members in the closing stages of last year—that is, that perhaps two Bills would be necessary. The first would be to get the process of direct elections started, and would seek simply that and nothing else. A relatively short, simple Bill, of perhaps 10 or 12 clauses, would be enough. The second Bill, which could even be taken in the next Session to make the Government's legislative burden easier—I put forward that suggestion to show how Opposition Members are anxious to help—would be to deal with the points that I have raised about statutes, the status of Members of Parliament and so on. That may be one reason behind which the Government may wish to shelter, but hon. Members should not allow them to do so.
Finally, there is on the Order Paper an Early-Day Motion on the subject


signed, at least by Friday evening, by 69 Members.

Mr. John Ellis: It is signed by a lot more now.

Mr. Dykes: I do not know. There were rumours over the weekend about some anti-devolution Members who want to use one or the other as a device for delay, and about others who could not care less about devolution but, none the less, wish to delay direct elections and so on. There are whole predations of resistance within the Labour Party, which may or may not be manifested. However, even if it is 80 Labour Members, mostly below the Gangway, who wish to delay this matter and open up the whole debate again and to see that this country, unlike all the others, is not represented at all—this subject has been debated already in the House, and I wish that it could be debated more—it is for the Government to introduce a Bill so that we can have a good debate on Second Reading.
Even so, bearing in mind what I guess to be the overwhelming will of the House that the Bill should be introduced, why should 80 Labour Members, who are not even members of the Government directly, delay the Government's programme?
Finally, we have learned over the weekend from the other place that there are some respectable distinguished peers from the Liberal Party who propose to introduce their own Bill in the House of Lords to deal with this subject. A statement was made over the weekend. Although I represent only myself, I would regard that as being totally unacceptable to this House. The direct elections Bill must come in the House of Commons. It is a major constitutional measure, and it must have the elaborate Committee stage that such a constitutional measure will need. All that that means is that the urgency on the Government is even greater. For those reasons, I feel that the Government should now press ahead with their objectives.

Mr. Neil Marten: Before my hon. Friend ends his speech, will he deal with a point that I find very obscure? One understands that if the European Assembly, as it is called in the White Paper, is to be directly elected, it is to receive more powers of some sort

to deal with the Commission as what is called the democratic reason for it. I do not think that that is denied by anyone. However, those powers have to be agreed between all the national Parliaments. I think that that is not denied by anyone. If, having got a directly-elected Parliament, the proposals for new powers are put forward and then blocked—for example, and quite possibly, by the French Parliament—the directly-elected European Parliament will have no extra powers. That is the point. Surely it is logical, as we are doing in our devolution legislation, to set the powers first and then to have the direct elections. It seems to be putting the cart before the horse to force or perhaps bulldoze through—perhaps that is an unkind phrase—direct elections like this.

Mr. Dykes: I always admire my hon. Friend for his ingenuity. However, he is a number of jumps ahead. What he ought to do is to welcome the introduction of the Bill so that we can begin all that debate, which will undoubtedly begin as soon as the Bill is introduced. [HON. MEMBERS: "Answer."] I can answer best by quoting—in definite conclusion—the words of the Foreign Secretary, speaking to the European Parliament on 12th January, when he said:
A directly-elected Parliament will be in a better position to strengthen the democratic voice in the Community. It will be better able to fulfil its rôle in relation to the Commission, and it will, I have no doubt, wish to influence the Council of Ministers.

4.30 p.m.

Mr. Michael Stewart: It is clear beyond doubt that the Government are committed to bringing in a Bill of this kind speedily. They are committed to their colleagues in the EEC where we have made it clear that we would use our best endeavours to make it possible for the direct elections to be held here and in the other eight countries by May or June 1978.
We shall be interested to hear what the Government have to say about the steps already taken by the other Governments. It may be that the answer given to us recently was correct but that events have moved on since. It would be useful to have an up-to-date account of what legislative steps or preparations have been made in the other eight countries. Even


if it is true that none of the other countries has yet taken steps, this would not excuse our Government from taking them.
We were pledged to use our best endeavours. It must be plain to anyone that if each of the nine countries were to say "Why should we move? No one else has moved yet", nothing would ever be done. That would please some of my hon. Friends who do not want the Community to work.
I am certain that the Minister will see that it is not an adequate excuse to say that no one has done anything yet. Even if that were correct, the Government are still under an obligation to use their best endeavours. The Government are committed to this Parliament. We were told in the Gracious Speech that this measure would be introduced. It would not be sensible to introduce it so late in the Session that it had no chance of getting through, or that the work which had to be done would be so delayed as to make it ineffective. The Government are under a clear international and national obligation to introduce this Bill in good time.
I take up the point raised by the hon. Member for Banbury (Mr. Marten) when he argued that the powers must be increased if we are to do anything at all.

Mr. Marten: No.

Mr. Stewart: He was saying that if we are to do anything at all, we ought to increase the powers first before having the direct elections.

Mr. Marten: No.

Mr. Stewart: Well, let us spell it out. The argument that he was advancing was that if we had the direct elections and the directly elected European Parliament demanded more powers and that were blocked by one of the Governments, there would then be the frustrated situation of a directly elected Parliament unable to get the powers it hoped to have. That is one arm of the general anti-Community argument. The other is to ask how, if we urge an increase of powers, we can increase the powers of such an undemocratic body as the present indirectly elected Parliament. If we try hard enough, we can always prove that since A ought to be done before B, or vice versa, it is better to do nothing.

Mr. Marten: I was not suggesting that myself. I was saying "It is often said that"; but I agree with the way in which the right hon. Gentleman finally got my proposition correct.

Sir Derek Walker-Smith: Whatever aspirations and sentiments different people may have on these matters, surely as a matter of law it is clear that direct elections do not change or increase powers, because any changes of that sort require an amendment of the Treaty which, under Article 236, requires ratification by the national Parliaments. It may be that in the course of time a directly elected Parliament will have a greater good will to increasing its powers by an amendment of the Treaty, but it can only be by that way and subject, therefore, to ratification by the national Parliaments.

Mr. Stewart: I do not dispute that. There is no automatic increase in the powers of the European Parliament.

Mr. Nick Budgen: Does the right hon. Gentleman agree that the legal position is relatively unimportant? Once we have a directly elected Parliament it will give to those directly elected representatives the moral authority to enable them to argue for more powers.

Mr. Stewart: I shall try to give way, but within reason. If I go on giving way, the whole of my speech will be made for me by those hon. Members who make interventions.
There is no automatic increase in the power of the European Parliament by virtue of direct elections, but the direct elections will give Members of the European Parliament more authority and, perhaps even more significant, more time to devote to the work of the European Parliament. Even with their present powers, they will become more effective users of them. Their capacity to criticise and to place under review the work of the Council of Ministers and the Commission will be increased even if there is no legal increase in powers.
In time, therefore, they will get the legal increase in powers as well. The job of a Parliament or an assembly within the Community cannot be done properly under the present arrangements.


A number of decisions made by the Commission and the Council of Ministers would either not have been made or would have been made better if they had been subjected to the more powerful and constant parliamentary scrutiny that could come from a directly elected body.

Mr. Spearing: Such as the House of Commons.

Mr. Stewart: No, my hon. Friend is still not taking the point. He has a bee in his bonnet about the extent to which this House can supervise the work of the European Parliament. I agree that it is a problem, but for that reason I want the European Parliament to be a powerful and constant reviewer and critic of the work of the executive arms of the Community.
My colleagues who were in the European Parliament with me did a conscientious job, and I trust that I did, too. We were all conscious of the fact that this can be only a makeshift arrangement. It faces the Member constantly with the problem of where he should be—in Luxembourg or Westminster.
The very fact that we are having this debate at a time when the European Parliament is sitting illustrates the difficulty. The person who has chosen to be a Member of the European Parliament has to make a choice of that kind. He may be quite sure that whichever way he makes it some ill-natured interpretation of what he has done will be put on it by hon. Members who do not like the Market. One gets hardened to this kind of thing after a time. It is not really suitable to the importance of the job which the European Parliament has today.
Therefore, this arrangement of the indirect election by national Parliaments of some of their Members to go to the European Parliament if it is continued will act as a drag on the proper development of the parliamentary element inside the Community and will create continual problems for Members who are honestly trying to do their duty as best they can both in this House and in the European Parliament.

Mr. Spearing: I am grateful to my right hon. Friend for giving way again, because he has given way many times. He has used an important phrase—the

proper development of parliamentary scrutiny. Does he agree that if the European Parliament becomes a proper Parliament, it will legislate and tax and will control the European Council and Commission and become in effect a federal Parliament? Is that what he wants? Is my right hon. Friend a federalist or is he not?

Mr. Stewart: I believe that one day the nations in the Community will be part of one federal State. I do not expect it to happen in my lifetime. It is a much bigger development than that. As none of us can foresee the future to that extent, there is not a great deal of point in arguing about it.
One thing is quite certain, however. A country cannot slip into a federal State unnoticing. That is exactly what cannot happen. It is extremely likely that the nine countries of the Community will practise an ever-closer union and that they will get a greater harmonisation of foreign policy and of economic and monetary matters. I think that that is likely to happen. However, it is not possible for a group of countries to turn themselves from being a group of nine sovereign States into a single federated State without being aware of the fact and without its being the conscious and willing decision of all the members of the federation.
That is why I say that for our purposes the point about federalism is not relevant to this Parliament. The idea that by making the European Parliament directly elected we shall somehow be lured into a federation without noticing it is complete nonsense. The decision to make a federation must be a conscious and deliberate one. Whether it will ever be made, I do not know. Looking back over the ghastly history of divided Western Europe for so many years, I feel that our descendants may be glad if it happens. However, that is not what we are arguing about now.
It is true, however, that the direct election of the Members of the European Parliament will help the process of closer co-operation among the nine countries. It is intended to do that. It will do that. If we are in the Community at all, we are committed to work for that. It is perfectly clear from the Treaty of Rome and from everything that has been said


since that the Community was not intended to be a completely static body and that its members would work for closer union and harmonisation in many matters.
Anyone who objects to that is really objecting to British membership of the Community at all. That, one would have thought, was settled in the referendum. Some of us who do not particularly like the area of referendums agreed to it on the understanding that we would abide by the result. The extraordinary fact is that it is those who demanded the referendum most eagerly who are most unwilling to accept its result.

Mr. Douglas Jay: Would my right hon. Friend agree that whatever we think about the referendum it contained no mandate to enter a federal system or specifically for direct elections?

Mr. Stewart: Quite clearly, the referendum contained no mandate for a federal system. I have dealt with that. That is not what we are arguing about. As to the holding of direct elections, that is mentioned in the Treaty of Rome. The referendum was held to decide whether we become members of the Common Market. Membership of the Common Market carried with it an obligation to work towards direct elections. That is plain enough.

Mr. Jay: Will my right hon. Friend agree with me that the document distributed throughout the country by the Government was not the Treaty of Rome but was this specific document which I have here in my hand?

Mr. Stewart: I quite agree, but it remains true that any country that enters the European Community is committed by the Treaty to work for direct elections. I am quite sure that the opponents of our entry did not fail to rub in that point and to stress all the horrors of having to sit in a Parliament side by side with foreigners and exploit the argument as much as they could. The idea that the public were somehow hoodkinked—

Mr. Spearing: They were.

Mr. Stewart: —by the referendum will not stand examination.
It is possible to outline any number of difficulties about direct elections. The Select Committee has been sweating on the nuts and bolts. One can argue about such matters as how many sponsors there should be on the nomination paper, what the deposit should be, and so on. I do not propose to go through all that, because we all know quite well that, if the will is there to carry through this legislation, those matters can be solved.
The advice I would give the Government as to the nature of the Bill is to make it as simple as possible. It is a large new adventure for the electorate. It is never sensible to ask people to try to assimilate too many unfamiliar things at once.
That is why I hope that we shall stick to the first-past-the-post system of election. For one thing, if we change now to something else it may come about that later on all the nine countries will change to an agreed European solution. I see no point in our having two changes. I want the process of voting to be as simple and as straightforward as possible for the electors.
The need for simplicity is also a reason for taking what the hon. Member for Harrow, East (Mr. Dykes) called clusters of constituencies. I am sure that is the way to do it—to make each European electoral district a cluster or group of whole parliamentary constituencies.
As a matter of fact, the task of doing that grouping without gerrymandering will not be all that difficult. Of course, if one deliberately set out to gerrymander it, it could be done, but it would not be in the least difficult to get a group of fair-minded people who, looking at the straightforward geography of the matter, could arrange the constituencies fairly enough.
I have seen one such scheme done by psephologists who carried out the simple exercise of first grouping the constituencies as the ordinary geography would seem to suggest and then adding up the votes cast in every constituency in the October 1974 General Election and seeing how it would have worked out in the resulting 81 electoral districts. The result would have been to return the 81 Members of the European Parliament in roughly the same proportions as


Members were returned to Westminster in that General Election. There is no mysterious process whereby the people's will would get distorted in this exercise, unless the groups of constituencies were arranged with the deliberate intent of distorting.

Mr. Russell Johnston: May I make one little point to the right hon. Gentleman? The October 1974 General Election itself was a very severe distortion in European terms.

Mr. Stewart: That is because the hon. Member dislikes the first-past-the-post system.

Mr. Johnston: No—the result.

Mr. Stewart: The hon. Member says that he dislikes the result. I dare say. It often happens that we dislike the result of an election, but I have never considered that that was a reason for wanting to alter the whole electoral system. For a long time I have believed in the validity and wisdom of the first-past-the-post system, and I have believed in it whichever party it worked to the advantage of, as it first works one way and then another. That is the way to approach the system we should use.

Mr. John Wells: In the model that the right hon. Gentleman is speaking about were constituencies grouped in equal numbers or population grouped in equal numbers?

Mr. Stewart: They were grouped by 81 areas of approximately equal populations. There is the difficulty we have in our own Parliament, that in some of the more thinly populated parts of the country we have to give the voters a bit of an advantage for otherwise a constituency becomes intolerably large geographically. I do not believe, therefore, that there are any insuperable difficulties about the mere mechanics of getting on with this exercise. The business of the Government is to get on with it.

4.50 p.m.

Mr. William Clark: I am grateful to my hon. Friend the Member for Harrow, East (Mr. Dykes) for raising this subject. I hope that we shall not have another Second Reading debate about whether we should join the Common Market. We are in the Common

Market. The question that we should be discussing is how to ensure that we are properly represented there.
One matter that worries most hon. Members is the Government's interminable delay. In November 1975 the then Foreign Secretary—the present Prime Minister—when speaking about direct elections said:
That is a Treaty requirement and, of course, we shall honour it."—[Official Report, 10th November 1977; Vol. 899, c. 946.]
The Treaty requirement was for direct elections. The right hon. Member for Battersea, North (Mr. Jay) may nod or shake his head, but it was always envisaged that direct elections would be held in May or June 1978.
It took the Government three months to bring out a Green Paper and another three months to set up a Select Committee. I should like to pay tribute to the Chairman of the Committee, the right hon. Member for Dartford (Mr. Irving). The Select Committee, of which I was a member, lost no time in producing a report. It issued its first report within one month to enable the Foreign Secretary to meet a deadline in Brussels or somewhere else.
The first report dealt with the size and number of seats, the dates of elections and whether they should be held every four years or five years. The second report, which came out two months later, in August, dealt with some controversial matters, such as the allocation of seats among the component parts of the United Kingdom. That was done as far as possible according to the proportion of population.
The report also dealt with the first-past-the-post system and the Boundary Commission rules. The report was produced in time to allow the Government to meet the deadline for holding direct elections in May or June 1978, but it has not been debated in the House. That does not show much enthusiasm by the Government for direct elections.
How was it that in November 1975 the Prime Minister could give a categoric assurance about direct elections being a Treaty obligation and yet do nothing about it? We are now in February 1977 and still nothing has been done. These reports were produced to give the Government an opportunity to introduce the


necessary legislation to enable direct elections to be held in May or June 1978.
The third report dealt with deposits, nominations, electoral law, dual mandates and links with the House of Commons. In one part of the report the Select Committee said:
The timetable envisaged by the Committee—which is the only realistic one consistent with the Boundary Commissions being able to complete their work—is dependent upon the first enabling bill dealing with the most urgent matters receiving the royal assent by the end of February 1977. Proceedings on a second bill (if such were found to be necessary) and on the motion to approve the Order in Council relating to the Community Decision and Act could be taken at a later date.
That was an all-party Select Committee which had the advice of many expert witnesses, including the Boundary Commission.
The Government should have stated by now that they do not agree with that paragraph in the Select Committee's report or they should have done something about it. It is not good enough for the Government to do nothing. Why are they delaying?
I do not want to be churlish or offensive about this matter. It is true that at the Labour Party Conference last year there was a vote against direct elections. Are the Government so scared stiff of their Left Wing that they think that they will not get the legislation through Parliament, or is the delay because of lack of parliamentary time? As my hon. Friend the Member for Harrow, East stated, there has been plenty of parliamentary time. It is only because of the incompetence of the Leader of the House that we have the present chaotic situation. It would not take much time to get the Bill through the House.
The subject to be dealt with in the Bill is the allocation of the 81 seats. My hon. Friend the Member for Harrow, East said that he did not agree with starting the Bill in the House of Lords. I do not go along with him about that. I do not think that it would make any difference to the amount of scrutiny that the Bill receives. If the Government say that they do not have time in this House, the Bill could start in the Lords.
Is the delay because the Government want to determine the boundaries? This is what worries most people. Are the

Government delaying the Bill so that at the end of the day they will be able to say to hon. Members "If you want direct elections in June 1978, alas, the Boundary Commission cannot sit." I remind hon. Members that Lord Thorneycroft, giving evidence to the Select Committee on behalf of the Conservative Party, said that it would be prepared to accept not the whole of the Boundary Commission procedure, but thought that there should be one appeal against a Boundary Commission report, which would cut down the time allotted.
I am not casting aspersions on the Government, but it is possible for psephologists to tie up 81 batches of constituencies. By including different places in different batches it is possible to achieve a different result with every play that is made. It is possible to ensure a Labour majority or a Conservative majority by changing the composition of the batches. Each Euro-constituency will be roughly the size of eight parliamentary seats. With respect to members of the Liberal Party, no matter how the psephologists play around with the batches of seats, it will not give them a majority in the EEC.

Mr. Russell Johnston: Not on the first-past-the-post system.

Mr. Clark: The one thing that is not a matter of controversy is that the United Kingdom should have 81 seats in a directly elected parliament. Why do we not determine them now?
Under present law, the Boundary Commission, in years to come is bound to make parliamentary constituencies conform with county boundaries. If we take the parliamentary boundaries as they are now—this was the reasoning behind the Select Committee's report—that makes it easy for the Boundary Commission to do its job.
As I have said, there will be an average of eight existing parliamentary seats to one Euro-constituency and the parties will have a great deal of organising to do. This applies to the Labour Party as well as to the Conservative Party. They will first have to select candidates. With the best will in the world, it is difficult to select candidates unless they can be told which areas they are to represent. Both parties in a Euro-constituency will also


have to get the constituencies working together, which will not be done overnight. It will take time, particularly with voluntary party workers.
No doubt the controversial subject of proportional representation will be raised by Liberal Members. As we are committed between 1978 and 1982 or 1983 to harmonising our electoral procedures—

Mr. Spearing: No.

Mr. Clark: The hon. Member for Newham, South (Mr. Spearing) says "No", but this is the evidence of the Select Committee. We are committed to the harmonisation of elections to the European Parliament. If that is so—and that was the evidence before the Select Committee—it would be stupid for this country to select proportional representation, whether it is the alternative Member or the single transferable vote. We may pick the wrong one and have to change it again in 1982. In view of the time limit, proportional representation should have been dropped. In any case, I do not think that anybody in this House could possibly take the view that a Select Committee considering direct elections, important as it might have been, should take a decision on proportional representation. I think that that should be a matter for a Speaker's Conference or something of that kind.

Mr. Spearing: rose—

Mr. Clark: No. Time is getting on.
I do not like links between the European Parliament and the House of Lords. The link should be with this place, with morning sittings if necessary, because this is the democratically elected Chamber, and I, as a Back Bench Member, should be able to question the 81 Members elected to the European Parliament. If they meet in the other place, I shall not be able to do that.
As the right hon. Member for Fulham (Mr. Stewart) said, there are many other matters in the third report on what we should do about nationals voting, deposits, nomination papers, and so on. Whether we like it or not, we are in Europe. The Prime Minister has given a categoric undertaking to be ready for direct elections by May or June 1978.
I hope that in replying to the debate the Minister will say something definitive

about direct elections. It is incumbent upon this country and the Government to bring these provisions into effect. We cannot continue with nominated Members. That is a killer. We do not have some of our colleagues here today because they are somewhere in Europe, and if there were 81 nominated Members the situation would be ludicrous. One has to look after not only the Westminster constituency, but the Euro one. If we are to be properly represented, we must have Members who can spend their time at the European Parliament.

Mr. Marten: I see my hon. Friend drawing his speech to an end. He speaks with special responsibility as Deputy Chairman of the Conservative Party with an interest in party financing. He will recall the Houghton Committee, which recommended certain subsidies from Government money for political parties. The Conservatives turned their face against that. I take it that we shall use the same standard and turn our face entirely against any EEC money, which is partly British State money, being used for these direct elections.

Mr. Clark: It is very kind of my hon. Friend to add to my responsibilities the job of Deputy Chairman of the Conservative Party. I do not lay down policy, but I can tell the House that the Conservative Party is diametrically opposed to the use of direct taxpayers' money. These direct elections will be an additional burden upon the British taxpayer because, presumably—[Interruption.] The hon. Member for Newham, South keeps saying things from a sedentary position, but to no avail.
For the direct elections we shall have free postage, and so on, such as one enjoys at a General Election in this country. The European Parliament is discussing whether it should bear some responsibility for some of the expenditure involved in direct elections. I do not think that that is analagous to the Houghton Committee recommendations. What we have to remember is that if Europe allocates some money for direct elections, eight member States will take it—France, Germany, and so on—and this country has to think seriously whether to refuse it. I hear someone say that we are different. We are different and we remain different, but we must not be stupid.
There can be direct elections only if we start now or if the Government are to determine the boundaries themselves. I was worried when the Minister of State, Home Office, Lord Harris, speaking in another place, referred to using a fairly full Boundary Commission procedure but said that the Government had not decided whether such a procedure was essential. The noble Lord went on to say:
My Lords, as I indicated when I began, the Government are determined to be ready to hold direct elections in May or June of 1978.
Thus, as recently as December, only two months ago, the Government gave that assurance.
The noble Lord went on:
I emphasise once more that the commitment to introduce legislation is there in the Gracious Speech. Nevertheless, it may be—and at the moment it is not possible to be definitive on this point—that in order to be ready for May or June 1978 we shall have to forgo certain procedures and certain modifications. …"—[Official Report, House of Lords, 15th December 1976; Vol. 378, c. 1007.]
Does the noble Lord mean that we shall have the right of appeal in the Boundary Commission? Perhaps the Minister will answer that. It is essential that in the setting up of these batches of eight constituencies the public have the right of at least one appeal.

Mr. Marten: Or two.

Mr. Clark: To have two appeals would take longer.
The local elections are to be in May 1978, and from an organisational point of view it would be better to hold the direct elections to Europe at least a month later—in June 1978.
We must not be the odd man out. I have proved conclusively that the Government have delayed taking action. They cannot blame the Select Committee. If we are to have the elections in June 1978, it is essential to have the Bill now. There could be two Bills—one setting up the 81 seats and letting the Boundary Commission getting on with its work, and another dealing with deposits and the other nuts and bolts.
Whatever we think about it, we are in the Common Market, and it is essential for us to be properly represented

there. I am convinced, as I think most people are, that direct elections are the only way in which we can be democratically represented in Europe. Consequently, I ask the Government for an assurance that the Bill will come to the House within the next week or two.

5.9 p.m.

Mr. John Ellis: The debate has touched on the referendum and what was agreed then. In making the case for the motion references have been made to promises, to target dates, and so on. I propose to refer to the White Paper that was issued as part of the discussion at the time of the referedum.
Paragraph 134 on page 39 of that White Paper said:
Thus, membership of the Community raises for us problems of reconciling the system of directly applicable law made by the Community with our constitutional principle that Parliament is the sovereign legislature and can make or unmake any law whatsoever. That principle remains unaltered by our membership of the Community. Parliament retains its ultimate right to legislate on any matter.
—The note at the bottom of the page says:
Legal and constitutional implications of United Kingdom membership of the European Communities, Cmnd. 3301 May 1967, paragraph 2 and paragraph 23.
We should bear this in mind. No mention was made of direct elections at the time of the referendum.
My right hon. Friend the Member for Fulham (Mr. Stewart) is an honest man. He has a vision of a united Europe, one country depending upon another. To simplify the argument, if it has the climate, Italy will grow the tomatoes and we shall provide something else. It is a dream, an ideal. I do not disbelieve the proposition. It follows from that that we need a Parliament to legislate. My right hon. Friend's time-scale was out, but he had no doubt that we should evolve to a federal system.

Mr. Michael Stewart: I did say that, but I pointed out that that was not germane to what we were talking about, namely, the desirability of a directly elected Parliament in the Community as it is now.

Mr. Ellis: It is germane to what we are discussing. That is the point.
A multiplicity of legislation is being pushed out and we need time to discuss it. There is an order coming before us tonight. It is said that our people in such a Parliament will be able to give detailed scrutiny to these matters. What is this body we are to set up? Even a parish council has its duties delineated—it looks after burial grounds. What about these representatives? It is an axiom of common sense that they will evolve powers. They will have powers of scrutiny. I do not object to those in favour of the concept of a united Europe with a directly elected Parliament putting these ideas forward but they should be honest about the argument so that we can debate the subject properly. That is what this is all about.
It is said that our decision represents the first step towards the creation of a United States of Europe. This issue makes our current devolution proceedings look pretty small beer. It affects the whole nature of this House of Commons. The least we can do as adults is to recognise the implications of our action. A directly elected European Parliament will mean that its members can say to us "We have the votes from your constituents, we have equal authority". That is fair. We should recognise that point because it will arise.

Mr. Bryan Gould: Would my hon. Friend agree that this House cannot possibly do justice to two major constitutional measures in the same Session?

Mr. Ellis: I was coming to that. Hon. Members will have noticed the Early-Day Motion which has about 60 or 70 signatures and which deals with this point. It points out that:
whatever the basic view on the desirability of Direct Elections … wide and careful debate of such fundamental issues is necessary.
It refers to the size of the electorate, methods of election, administrative arrangements, numbers of seats for various parts of the United Kingdom, and so on. So far, all that we have mentioned is whether there should be proportional representation or a first-past-the-post system and how the constituencies will be organised.
It is a pity that no hon. Member representing an Ulster constituency is here today. They have a different problem over there which merits discussion. How

will their three seats be delineated so that all sections of that unhappy community are represented? All of these matters of major significance remain to be debated.
This motion is all about whether we have the time in this Session to produce a Bill dealing with direct elections. Whatever our views, that is the basic point. Further, we are told that we are to be the ones who will make decisions, that Members of a European Parliament will have no powers. How are we to keep in touch when they are over there? There is the suggestion that they should all be given life peerages. God forbid that we should ever do that. Are we to have these people sitting in the House, acting as passing strangers who report to us?
The Select Committee produced two huge reports that have never been discussed. The only part of the Select Committee's conclusions which was produced in heavy type said:
The Committee have made this Second (Interim Report because they regard it as essential that, if this country is to continue to seek to hold direct elections in May or June 1978, the House should be invited to take decisions at an early date on the allocation of seats between the component parts of the United Kingdom, the electoral system and the terms of reference and procedures to be given to the Boundary Commissions. They therefore urge that the Government should find time for a debate in the House on these issues in the autumn"—
that was last autumn.
at the earliest possible moment. In any event a short Bill should be introduced at the outset of the new Session.
These are weighty matters which have not been debated. We have not had the Bill.

Mr. Douglas Hurd: Let us have it now.

Mr. Ellis: There is no time in the present Session to deal with these matters. It is completely unrealistic to think that it can be done. It is no good Conservative Members flapping their hands. That is the position. The Select Committee, which was heavily in favour of direct elections, made the point that a short Bill should be introduced at the beginning of this Session. Conservative Members have been sitting on their bottoms for a considerable time. It is only in the past few weeks that they have become alerted to the situation.

Mr. Hurd: The hon. Gentleman is making a powerful indictment of the Government for allowing the report, now six months old, to accumulate dust without taking any action on it. Contrary to what the hon. Gentleman says, we have been pressing for action for a long time. Is the hon. Gentleman suggesting that at the summit meeting at which the right hon. Gentleman will take the chair in Rome next month the Prime Minister should say that we in Britain propose, contrary to what the Prime Minister has previously said, to do nothing in time so that the whole experiment founders?

Mr. Ellis: I do not speak for my right hon. Friend the Prime Minister: I speak as a Member of this House. I believe that the hon. Genteman was on the Select Committee. He should not put the burden on me, someone who was not a member of the Select Committee, or on my right hon. Friend, or anyone else. I gather that the hon. Gentleman was in favour of the report, which said that certain things should happen. He has not raised the matter at every business question time. I am a fairly workaday Member. It seems to me that only in the past few weeks has the Leader of the Opposition started raising the matter at business question time. [HON. MEMBERS: "No."] It is no good the Opposition shouting "No". Days are set aside when they can raise their own business.
The hon. Member for Harrow, East (Mr. Dykes) is to be congratulated on taking the initiative. The rest of the Opposition are being dragged along on his coat-tails. The Opposition have been supine in this matter. [AN. HON. MEMBER: "Answer the question."] I have dealt with the question.
Some of us will not make these weighty decisions unless sufficient time is given to consider them and the implications are debated. The House is always fair. At this point in the Session to talk about rushing a Bill through is wrong. We should serve our country ill if we went into such detailed and important matters speedily and dealt with them in an ill-considered way.

5.23 p.m.

Mr. Russell Johnston: This is not the time to talk about whether we are to have direct elections. It is a

question of how we are to have them. It is all very well for the hon. Member for Brigg and Scunthorpe (Mr. Ellis) to give us rhetoric, though it has its place, virtue and point. But the hon. Gentleman, not we, is very much out of touch with political reality if he thinks that hon. Members have not thought about the matter during all the debates leading up to our accession to the European Community in 1972, the debates in the referendum campaign, consideration of all the questions leading up to the Government's commitment in the Queen's Speech and all the debates leading up to the Foreign and Commonwealth Secretary's commitment in the Council of Ministers. We have thought about how Europe should be democratically controlled, as have many people in the country.
I agree with the hon. Gentleman that the hon. Member for Harrow, East (Mr. Dykes) is much to be congratulated on initiating the debate. It is a pity it is timely, because the Select Committee said that there should be a debate much earlier and that a Bill should be introduced much earlier.
In my limited time I wish not to cover the ground that others have covered but to direct attention to the second part of the motion of the hon. Member for Harrow, East, which says:
notes that unless this legislation is published forthwith there will be insufficient time for the Boundary Commissioners to complete the necessary work to meet the official target date of May-June 1978; and recalls that failure to bring forward the Bill at the earliest opportunity may prevent such elections taking place in any of the member-states".
The first point is that although some member States have indicated their intentions and have produced Bills, as in Eire and other countries, no Government so far have engaged in legislation—not even France, which intends to embark upon a fundamental change in its electoral system. In other words, the matter has become so urgent entirely because of the Government's intention to create those large, first-past-the-post constituencies so extolled by the hon. Member for Croydon, South (Mr. Clark) throughout the United Kingdom, with all the attendant problems of boundary changes and inevitable Boundary Commission arguments. It was extraordinary to hear the hon. Member for Croydon, South saying blandly, as if this were part of the Holy Writ of


democracy, that we can always work the matter out in a way that ensures fair play to all. The two sides will work it out and make a ploy between them.
I said "throughout the United Kingdom". Before I go into that question, I should like to ask whether an exception is intended in Northern Ireland, as has been rumoured. We know of Eire's lead. We also know what will happen if there are first-past-the-post constituencies in Northern Ireland. The hon. Member for Brigg and Scunthorpe, who is so anxious about democracy, calmly said "I hope that in Northern Ireland all elements in the divided community will be properly represented in three seats". The fact that the hon. Gentleman should care about that in Northern Ireland and seemingly care for it nowhere else seems an extraordinary piece of double-think.

Mr. John Ellis: There is no doublethink. The present situation in Northern Ireland must cause concern to us all, and that gives reason for picking out Northern Ireland. The hon. Gentleman is unfair, because Northern Ireland must occupy the minds of all of us to a great degree. Although the hon. Gentleman and I come to different conclusions, my care for democracy in any part of the United Kingdom or of the world where we have some influence is as great. Northern Ireland is a special case, and it was in the context of that unhappy community that I spoke.

Mr. Johnston: Those of us who have argued for a fair proportional relationship between votes and seats find it deeply depressing that only where violence is bred do some people give attention to the matter.
If we alone in Europe have a non-proportional system when the elections take place, as seems likely, that will have a direct effect on the balance of influence on European opinion. We are talking about influence, not a legislative Assembly. We are not talking about electing a Government in Europe. The influence that the British exert could be contradictory to the voting balance that the election is supposed to test.
My third point concerns the Select Committee. I should like to skim through its five basic arguments against changing the system. First, it was against two

changes in a short time—in May or June 1978 and then four or five years later when we should have to standardise this. To change from 635 constituencies to 81 is a massive change. Surely it is better to adjust to such a change rather than to hang on to something that will inevitably be changed, as even the hon, Member for Croydon, South would concede.
Secondly, there was the question of practicality. That is a matter of political will and is not something that one can argue about. We can see even in the production of a devolution Bill that it is a question of political will. If anyone had asked the Labour Party five years ago whether it would produce a devolution Bill, its members would have laughed in his face. The Labour Party did it eventually because political realities affected it.
Thirdly, the right hon. Member for Fulham (Mr. Stewart) and others say that the existing system is familiar. It was depressing to hear the right hon. Gentleman say so in the light of the Northern Ireland experience, where a new system was introduced in a troubled situation in a very short time and was easily understood and assimilated and voting took place under it. Fourthly, it is argued that it would be difficult for constituency organisations to operate a new system, but it will be difficult for them anyway to operate in large groups of constituencies on the present system.
Finally, it is argued that the present system would be easier for the voters in that they would associate with existing constituencies. But surely it would be easier for voters to associate with, for example, Greater London, Yorkshire, Scotland or Wales than with any of the clusters of constituencies that can be worked out.
What will happen if we have first-past-the-post elections? This is a matter for concern even if we create these large constituencies on some sort of accelerated procedure, which seems to be the only possible way to do it. For example, it seems that Scotland is to have eight seats. According to all the computations and what the psephologists say, if the Scottish National Party drops back a bit, as it might, and it is arguable that it will give a few votes to the Conservatives in the North-East of Scotland, it will get no seats


out of 27 per cent. of the poll, which would cause trouble.
On the other hand, suppose that one-fifth of the Labour vote in Scotland went to the SNP for one reason or another. It is possible in some circumstances that the SNP could get almost the lot, with perhaps a Tory seat in one area and a Liberal seat in another.
Throughout the United Kingdom there is a swing towards the Tories. If that persists into next year, we could end up with a share-out in which the Tories had over 60 seats while the Labour Party was down to a derisory five or 10 seats. That is possible because not even the strongest supporter of the first-past-the-post system will deny that it produces violent swings for a small shift in voting strength.
I summarise my case in four brief points. First, the second European election will require a common system. As it will be on proportional representation, we should move towards it now. Secondly, for the Government nationally, let alone in part of the country, like Scotland, to put themselves so tremendously at risk to voting swings seems incredibly foolish. Thirdly, any proportional representation system is easier to legislate and quicker than the first-past-the-post system with large constituencies.
Finally, in Europe we are, after all, electing an Assembly to advise, not a Parliament to legislate or a Government to govern. What we want are the people's views. It would be deeply sad if this country, with all its long democratic traditions, should be the means and the cause of delaying that happening.

Several Hon. Members: rose—

Mr. Speaker: May I appeal for a sense of fair play? I am grateful to the hon. Member for Inverness (Mr. Johnston) for his brevity. There is less than an hour for everyone who wishes to speak to be called before the winding-up speeches. I hope that hon. Members will be brief.

5.34 p.m.

Mr. Douglas Jay: I agree with at least one statement made by the hon. Member for Harrow, East (Mr. Dykes)—that this subject is at least as important as devolution, to which we have been devoting so much time. I am

afraid, however, that I agree with very little else that the hon. Member said. What he seems to be trying to do is to push this country into a federal system in the EEC without having the honesty to admit to the public that that is what he is doing. That is not fair to the electorate.
I shall make only two points—rather fewer than those put by the hon. Member for Inverness (Mr. Johnston). The first is that the Treaty of Rome, which almost no Opposition Member has mentioned, lays no obligation on any member State to introduce direct elections, still less to do so by any specific date or year. Secondly, the referendum gave no mandate whatever from the electorate for direct elections, or for the major step towards merging this country into a federal State which direct elections imply.
Let us look at Article 138 of the Treaty of Rome. It is well known to all those who have studied it—and I suppose that the hon. Member for Harrow, East has done so—that it lays no obligation on member States for direct elections and mentions no date for them. I only regret that earlier on some Foreign Ministers seemed to imply that it did. Article 138 is remarkably clear. It involves two obligations. The first of these is that:
The Assembly shall draw up proposals for elections by direct universal suffrage in accordance with a uniform procedure in all Member States.
That point will be of interest to the hon. Member for Inverness. Those words lay an obligation on the Assembly but not on the member States. They leave the member States free to assent or not as they please. When the Assembly has drawn up its proposals—this it has to do and has done—then, whatever happens to them, that part of the Treaty has been honoured. But let us note that the elections have to be
in accordance with a uniform procedure in all Member States.
Secondly, Article 138 lays down that
 The Council shall, acting unanimously, lay down the appropriate provisions, which it shall recommend to Member States for adoption in accordance with their respective constitutional requirements.
That is an obligation on the Council and, again, not on the member States. It is an obligation first, to lay down provisions


and, secondly, to recommend them to the member States. Article 189 states very plainly:
Recommendations and opinions shall have no binding force.
Therefore, there is no obligation on the member States as such—I think that the Minister will agree with me—but only on the Assembly and the Council respectively.

Mr. Dykes: Would not the right hon. Gentleman agree that clever constitutional lawyers, taking all sorts of views, have suggested that "uniform procedures" can mean a range of things from—at a ridiculous extreme—all ballot boxes being painted green to a totally harmonised electoral system? Surely the word "recommendation" in the form quoted by the right hon. Gentleman is not "Recommendation" with a capital R as received from the Council of Ministers, which is an operational word and something on which agreement has been reached unanimously.

Mr. Jay: I do not think that there is any dispute about the word "recommendation". There is no dispute that it is a recommendation. But it is not binding on the member States.
But there is a provision in Article 138 that if there are to be direct elections, they must be by uniform procedure in all the member States. I think that the hon. Member for Inverness would have made an even better speech if he had quoted those words. If, however, there were not a uniform procedure, the elections would not be legal under the Treaty. Without purporting to be a constitutional lawyer, I agree that one can argue about what "uniform procedure" means, but it must mean something. Surely most people would suppose that it must mean in practice a procedure such as proportional representation, since many of the other member States will be adopting that sort of procedure. Whether it means that or not, clearly there has to be a uniform procedure.

Mr. Marten: Perhaps I can come to the right hon. Gentleman's aid. In the agreement or decision that the Ministers reached in Brussels on 20th September 1976 setting out all this stuff about direct elections, they referred to proopsals for a uniform electoral procedure. I do not know whether I am right in thinking

that they knew what they were talking about, but if they did they must have had the same thing in mind as the right hon. Gentleman when they agreed to that proposal.

Mr. Jay: The hon. Gentleman has anticipated me. I was just about to turn to the statement made by the Minister of State, Foreign and Commonwealth Office on 22nd December. I took the occasion to ask the Minister of State whether it was the Government's intention to honour the obligation to adopt a uniform procedure. I draw the attention of the House to his rather remarkable answer. He said:
It will not be the first case, or the last, I suspect, when the literal interpretation of the Treaty of Rome will not be followed."—[Official Report, 22nd December 1976; Vol. 92, c. 667.]
That appears to be an admission by the Government, or at least by the Foreign Office, that the proposals contemplated are not in accordance with the Treaty of Rome, because they do not provide for a uniform procedure. We seem to have reached the curious position in which the Foreign Office asks us to adopt direct elections because of a Treaty obligation, although they then admit that the proposals are not in accordance with the Treaty. It is, of course, said that we must not be too legalistic, but this does not seem to be a very satisfactory situation. Even if we are not legalistic, let us at any rate be legal.
So the truth is that under the Treaty there is no obligation on the member States to adopt direct elections by any specific date. They are perfectly free to do what they think right on general political grounds and in their countries' interests. If there were an obligation to adopt elections by a particular date, it would be remarkable that we have already carried on for 18 years since the Treaty of Rome without the adoption of direct elections. If it is legal to do without them for 18 years, it is legal for 28 years, 58 years or even longer.
The second relevant fact that I wish to argue is that, whatever is in the Treaty of Rome, the referendum, the result of which I hope we all accept, gave no authority from the electorate for direct elections, still less to adherence to any federal system or unitary State. Indeed, the whole tenor of the Government's


referendum manifesto was precisely the opposite. I am sure that that is something to which the Manifesto Group will attach great importance.
In the manifesto—I mean not the "Yes" pamphlet which was distributed throughout the country, which was no doubt partisan, but the official Government manifesto which was adorned not merely by the signature but by the photograph of the then Prime Minister—there was no mention of direct elections. If the Government believed that there was a commitment to proceed to direct elections, why did they not mention that in their official manifesto?
In fact, they said something very different. When referring to the Community the Government said:
our continued membership will depend on the continuing assent of Parliament".
If that is so, it follows even more clearly that involvement in a more closely-knit and more federal system must even more so depend. The same manifesto then stated categorically:
The Minister representing Britain can veto any proposal for a new law or a new tax if he considers it to be against British interests.
Article 138 is subject to this veto because it states that the Council has to be unanimous. The manifesto concludes:
All the nine countries also agree that any changes or additions to the Market Treaties must be acceptable to their own Governments and Parliaments.
If my right hon. Friend the Member for Fulham (Mr.Stewart) were in the Chamber, I should draw his attention to those words. In fact, those are the words and the pledges on which the country voted. Clearly there is no mandate for any sort of direct elections or any further step towards a federal State. To pretend that there is such a mandate would seem to me just another deception in this long story of attempts to mislead the public.
To be fair to the hon. Member for Saffron Walden (Sir P.Kirk), he admitted after the referendum—this was what he told the assembly at Strasbourg—that the result was not a vote for any sort of federal system. The then Minister of State, Foreign and Commonwealth Office—the present Secretary of State for Prices and Consumer Protection—is recorded by Hansard as nodding assent when I

asked him on 3rd December 1975 whether he agreed with the hon. Member for Saffron Walden that that was the position. Therefore, we have it on the authority of my right hon. Friend and of the hon. Member for Saffron Walden that the referendum was not a mandate for proceeding from the present Common Market to a federal system.
Some hon. Members—the hon. Member for Harrow, East did this a little earlier—may argue that direct elections are not a step towards federation. I am glad to see the right hon. Member for Knutsford (Mr. Davies) nodding his head. It is argued by some that direct elections have nothing to do with that. If that is the view of hon. Members, I refer them to "Facts" one of the expensively-produced and freely-circulated publications which are published monthly by the European Movement. I suppose that in some sense it can be claimed to be authentic. This publication is dated July-August 1976. In especially black type it states:
In two years' time, member countries of the Community will elect their first European Parliament. This historic decision represents the first real step towards the creation of the United States of Europe.
That is the view of the European Movement. Some people in this country may agree with that and may favour such a development, but it was precisely this proposal that caused Hugh Gaitskell to say in his memorable speech of 1962 that, whether it was right or wrong, it was not a decision to be taken lightly after many centuries of British independence. It is not to be taken lightly, certainly not after three hours' debate in the House tonight.
But whatever else we may believe, it is perfectly clear that there is no mandate from the British electorate for any further developments of this sort. Unless and until there is, I hope that such proposals will be firmly rejected by the House.

5.49 p.m.

Sir Nigel Fisher: Like many others, I very much welcome the initiative of my hon. Friend the Member for Harrow, East (Mr. Dykes) in bringing forward his motion, but I find it extraordinary that it should have been necessary. That it is necessary is due entirely to the dilatory conduct of the Government


in not having produced their own Bill long since.
The right hon. Member for Battersea, North (Mr. Jay) became very involved with all the old Common Market arguments that I had hoped we had done with by now. He questioned whether we have treaty obligations to do this, that or the other. One thing is quite certain—namely, that the Government have an obligation as a result of repeated ministerial statements to the House to bring forward a Bill and to do so without any further delay. Therefore we are not, or should not be, discussing the principle.
To do so is to rehash all the old arguments. Nor are we discussing the date. We know the date. We are committed already to the summer of 1978. We should be discussing the various methods by which the end is to be brought about.
Quite apart from the arguments in principle, I am told by my hon. Friends who serve in the European Parliament that in practice it is becoming quite impossible to cope with the strain due to the immense work load and constant travelling which membership of both Parliaments involves.
I come, then, to how we are to organise the elections and on what system of voting. It seems to me that 81 single-Member British seats in Europe would have to be very large constituencies with probably about 500,000 electors in each. They would be much too large to retain much of the personal relationship between a Member and his constituents which we in this House value. However, that is not really necessary, because the personal problems which are brought to us at our surgeries and in our mail of housing, pensions, social security, unemployment and so on are not those which arise nearly so often in the context of the European Parliament.
Moreover, the boundaries of 81 individual constituencies in Britain, quite apart from being extremely difficult and time-taking to draw, would be artificial and would not correspond to any existing political organisation or, indeed, to local newspaper, radio or television coverage in a given area.
This means that there is a great deal to be said for taking the existing regions as the representational basis—presumably

the eight English regions, plus Scotland, Wales and Northern Ireland, organised as multi-Member constituencies. That would be the same basis as that used already for the GLC, as that used for Northern Ireland in the days of the Assembly there, and as that which the Government now propose to use for the Scottish and Welsh Assemblies.

Mr. Timothy Raison: One of the snags about all regional systems is that we have, for example, the South-East Region with a population of 18 million people. Does my hon. Friend suggest that we should make one constituency out of that enormous area?

Sir N. Fisher: I am suggesting that it should be on a regional basis, and a multi-constituency basis within the regions.
The point which I am leading to is the voting system. We could, of course, retain the present first-past-the-post system for Europe as we now have in Britain. But all the other eight countries, including France, which does not have a PR system for its national elections, will elect their European Members by proportional representation. We do not have to do the same, of course, but we shall almost certainly conform, if not in the first elections, certainly in the second and subsequent elections, to that sort of system.
Moreover, the results of the first-past-the-post system for Europe would probably be grotesque, as the hon. Member for Inverness (Mr. Johnston) pointed out. On that system, for instance, the Labour Party might not get a single seat in the South of England and the Conservative Party might scarcely get a single seat in the North of England. If the European elections were held at a different time from our national elections, which is highly probable, we could get a situation in which a British Government, unpopular in mid-term, as most Governments are, might have very few representatives of its party in the European Parliament.
The normal political swings would be magnified by low polls in very large constituencies and might well result in either of the main parties securing a large majority of seats in the European Parliament for a minority of votes in Britain. The Liberal Party, whose vote is evenly spread across the country, on an October


1974 voting pattern, would not have a single seat in the European Parliament, although its vote in Britain on that voting pattern would exceed the total populations of either Denmark, Southern Ireland or Luxembourg, which would all have seats in the European Parliament.
On the other hand, a regional party like the Scottish National Party, which I see is not represented in the House today, could obtain all eight of the Scottish seats in Europe although its vote in Scotland might only be about 35 per cent. of the electorate. In Northern Ireland the situation would be very serious. The Catholic minority would be unlikely to get any of the Ulster seats although the Catholics comprise almost 40 per cent. of the population of Northern Ireland.
The supporters of our present system of voting, of whom I am not one, rest their case on the argument that it produces effective single-party government. As one hon. Member has pointed out, however, that proposition, quite apart from being of very doubtful validity in itself nowadays, has no relevance whatever to the European elections because there we are not voting for a Government anyway. We are voting for a fair representation of all the main political parties in the Community, and the one outcome which we do not get from our present system of voting is a fair result. The outcome is very much the reverse. Even its strongest supporters would not seriously argue that our present voting system is fair.
Last summer, the Select Committee undertook to research into the electoral systems of, say Germany or Finland and heard no expert evidence. The Select Committee simply voted for the Westminster system on the grounds, as I understand it, that there was insufficient time available to agree about an alternative and that the present system was understood by the electorate and was easier for constituency organisations to operate. I do not regard any of those reasons as overriding or even as necessarily accurate.
I believe that the present system might produce a most unfortunate, indeed, bizarre, result. To take Scotland again as an example, the Select Committee recommended eight European seats for Scotland, which on the October 1974 voting figures would have produced six

Labour seats and two SNP seats. The Scottish Conservatives, although securing 25 per cent. of the votes in Scotland, would have been unrepresented in the European Parliament. The Labour Party would have got three-quarters of the European seats for about one-third of the votes in Scotland
However, before the Government think what a good system that must be, let me point out to them that if only one-fifth of those Labour votes switched to the SNP, which is quite likely at present, every one of the eight European seats would go to the nationalists, and a minority party committed to separatism would speak exclusively for Scotland in Europe.
On the other hand, as the hon. Member for Inverness pointed out, if the SNP lost a little ground to the Tories, which again is very likely, the opposite result would follow and the SNP might fail to win a single seat in the European Parliament. So the outcome of elections to Europe on the first-past-the-post system is a complete lottery. It will throw up totally unrepresentative results depending almost entirely on the political climate in which the elections are held, on the date on which they are held and on very small voting swings either way. If, on the other hand, we decided on a PR system—almost any PR system would be preferable to first past the post—at least we should get a fair result and one which was in proportion to the votes cast.
It is not too late for the House of Commons to think again on this important issue, and I hope very much that it will do so.

6.0 p.m.

Mr. Roderick MacFarquhar: I do not want to follow the points raised by the hon. Member for Surbiton (Sir N. Fisher), not because they are not important but because I think that it is vital that direct elections should take place under whatever system is used and Parliament should then settle the electoral system for itself for the future.
I must quarrel with the somewhat disingenuous way in which some of my hon. Friends have tried to pretend that the issue of direct elections will have been sprung upon them at the last minute if a Bill comes before the House in the next few weeks, as I hope it will. Direct elections have been on the agenda of Europe


since the beginning of the European idea and the development of the European movement.
I do not intend to quote, but one could look back to the Treaty of Paris in 1952 and the Treaty of Rome, which has already been mentioned and quoted. Also, decisions were taken on this matter in 1960, 1961, 1967, 1969 and 1974—all before the referendum. Indeed, my right hon. Friend the Member for Battersea, North (Mr. Jay) made the point for me when he quoted High Gaitskell in 1962. Mr. Gaitskell realised how important an issue this was and that the debate would go on in Europe and in Britain for many years. When this debate ends tonight, it will not be the end of three hours' discussion but will be the end of three decades' discussion on direct elections.

Mr. Jay: If that is so, can my hon. Friend explain why direct elections were not mentioned at all in the Government's manifesto?

Mr. MacFarquhar: I do not know. I did not draw up the manifesto. But in the many meetings which I held during the referendum campaign the people who attended were in no doubt whatever that the issue of direct elections was one of the implications of the referendum. It is disingenuous of the opponents of the EEC to suggest that this matter was not raised repeatedly during the referendum campaign. If the opponents did not raise the issues of direct elections and sovereignty during that campaign, they did not do their job properly.

Mr. Marten: Of course we raised it, but can the hon. Member explain why there was no reference to direct elections in the Government's document? If this is such an important issue, why was it left out?

Mr. MacFarquhar: As I have said already, I am not in a position to tell the House that. Perhaps when he replies the Minister will answer that question. But the question is irrelevant. The issue of direct elections was raised repeatedly in the referendum campaign. If any hon. Members suggest that when the British people voted overwhelmingly in favour of the EEC they were voting for standstill, the status quo and an organisation that was frozen in aspic, they have a very

odd idea of their constituents' political thinking.
It appears that some hon. Members who oppose this measure seem to want the European Council of Ministers to sit down and draw up in detail an elaborate system of federal government which we could then spend two or three sessions debating in this House. But that is not the way we do things in Britain, and neither is it the way they do things in the Common Market. It is a gradual process of development, and always has been.

Mr. John Ellis: My hon. Friend is speaking as a Back Bencher. But the Government keep saying that direct elections will not affect the powers of this House. I think that my hon. Friend is a federalist, and he is in favour of introducing federalism by the back door.

Mr. MacFarquhar: It is for Ministers to answer for the Government and it for me to answer for myself. I shall come to the issue of federalism later.
One of the most important aspects of direct elections is that of democratic control, which is not possible at present. My right hon. Friend the Member for Fulham (Mr. Stewart), with all his experience, looked at the present situation, and I want to look very briefly at the situation facing an elected Member to the European Parliament. He would be spared the enormous case load of constituency work and the long hours spent in this Chamber. That is why he could devote himself full-time to representations on behalf of his constituents on the many matters which can only be decided, or, at least, must be discussed, at European level—macro-economic policy, questions of human rights and the opportunity to control the multinationals, to mention just a few.
My hon. Friend the Member for Brigg and Scunthorpe (Mr. Ellis) asked to whom elected Members would be responsible. That seems a very strange question for any Member of Parliament to ask. These directly-elected Members will be responsible to their constituents, just as every Member of this House is responsible to the constituents who elected him. Also, our directly-elected European Members will be responsible to the nation as a whole, and to the party organisation


which selected them to stand and which helped with their election.
In terms of a mandate, there will be no responsibility to this Parliament at all. No directly-elected Member will have any responsibility to this place. [AN HON. MEMBER: "What an admission."] It is not an admission, it is a statement of fact. It would be ludicrous to suppose that any party would not take steps to ensure intense consultation and co-ordination between its Members in the European Parliament and its Members in this House. [Interruption.] I heard laughter from some of my hon. Friends below the Gangway. I sympathise because I notice the extent of the interest taken by this side of the House in our delegates to the European Parliament, and I agree that the actual consultation and coordination has not been considerable. However, the Labour Party would want to arrange things so that Members could take advantage of such consultation.
Another important objective of European direct elections is that these will mean that there will be greater control over the activities of the Commission and ultimately the Council of Ministers. Many hon. Members who opposed our entry into the EEC complained repeatedly over the years that there was no democratic control over the Commission. They complained about these bureaucrats—although the bureaucracy in Europe is very tiny compared with our own—and said that there was no way of controlling them. We are now finally getting to grips with the problem of democratic control, and this will spare many of my hon. Friends from long weary hours in this Chamber and "scorched earth" tactics late at night when they are trying to control European legislation. That burden will be taken from them by directly-elected Members who will have the time to deal with it.

Mr. Spearing: My hon. Friend has made an admission that after direct elections control of European legislation will not rest with Members of this House. That means that the Community will be a federal State, and he must be a federalist.

Mr. MacFarquhar: My hon. Friend keeps trying to push me into telling the House that I am a federalist. I am quite

happy to say it. He and other hon. Members shout that word across the Chamber as if it is a taboo word, like "racist" or "parliamentary leper". It is a simple term which describes some—but not all—of my political views. I am happy to admit to it. Like my right hon. Friend the Member for Fulham, I believe that direct elections will be another step in the process of Europeanisation and will lead ultimately to the United States of Europe. I have no hesitation in stating that. To me there seem to be reasons for advocating that kind of federal unity which are neglected.
I hope that when we come to direct elections and we inevitably go over the same ground there will be an opportunity to discuss at greater length why those of us who favour that kind of movement do so. My right hon. Friend the Member for Fulham mentioned the need to end once and for all the devastating wars into which this Continent has plunged itself. There is the need to unite and rid ourselves of the narrow nationalism which is so characteristic of the people who oppose the Common Market. There is also the need to take decisions at the European level on economics, where there is an increasing need for such decisions to be taken.
Let me conclude with two questions to my hon. Friend the Minister. I have spoken not in order to bare my breast and come clean and say that I am a federalist—my hon. Friends know that anyway. My purpose in speaking has been to press the Government, as the hon. Member for Harrow, East (Mr. Dykes) sought to do, to reveal their intentions. Are they honourable intentions? In the Government's estimate, how long will it take to get the Bill through Parliament? I know that it would be easy for my hon. Friend to say that this is a matter for the Leader of the House. I ask him not to shelter behind such a parliamentary subterfuge. He is far too good a parliamentarian to do such a thing. Let him give us his estimate. After all, he will be responsible for the Bill.
Will my hon. Friend give a pledge that for him and the Government the direct elections Bill, which is as important constitutionally as the devolution Bill, will get as much parliamentary muscle


from the Government as the devolution Bill?

6.12 p.m.

Mr. Richard Body: We have been urged to be brief and, therefore, I shall make only one point. All along and for years the hon. Member for Belper (Mr. MacFarquhar) has admitted being a federalist, and we respect him for doing so. I regret so much, however, that others in favour of direct elections have shied away from that phrase. We know perfectly well that most, if not all, of them believe in some kind of United States of Europe, even a supranational institution with powers that prevail over the subordinate national institutions. In plain words, they would like a European Parliament to take over the powers of this House. As the hon. Member for Belper was good enough to recognise, it is only when that is done that, in their view, they will have sufficient power over the European Commission and its bureaucracy.
Of course, the transfer of power cannot take place until the European Parliament itself is democratically respected, hence their plea now for direct elections. But they run away from the question of what precise powers they would wish the European Parliament to have. I have heard certain postprandial indiscretions on their part that catalogue a list of functions to be removed from this House that would make this House but a puny waif of its present self. We know that the federalists believe that progress towards a United States of Europe is along a series of ratchets. A directly-elected European Parliament is one such ratchet. Once over it, there is no going back. We would have to press on towards the transfer of power from the national Parliaments to the supranational version.
If this House in due course concedes that there should be a substantial transfer of power from it to Strasbourg, that Assembly should be directly elected. I hope we all agree about that. But there is no certainty that this House, with the democratic Assemblies of the other Eight, would in due course concede this transfer of power and functions. I therefore do not understand the necessity for all the paraphernalia and the expenditure of a European general election if there is not to be such a transfer of power and function.
I think my hon. Friend the Member for Banbury (Mr. Marten) said that we were putting the proverbial cart before the horse. The first question that the European Council, as it is now called, must answer is, what do we want a European Parliament to do? What functions will it perform and what powers should it have? If the answer is that it should be no more than it is at present, there seems to be no case for direct elections. If the answer is that there should be simply a modicum of transfer from this and the other democratic Assemblies, equally there might be no case for direct elections.
Only if we want to see a substantial transfer of power and functions from Westminster to Strasbourg is there an argument for direct elections. As we have yet to agree to that transfer, it seems premature for us now to proceed with direct elections. I hope, therefore, that all who are not federalists will see the argument in that light.

6.17 p.m.

Mr. Nigel Spearing: The hon. Member for Holland with Boston (Mr. Body) has pointed out that the process of direct elections is inevitably and inexorably a movement towards the federal system. My hon. Friend the Member for Belper (Mr. MacFarquhar), whose straightforwardness I praise, made the point exactly in his speech. Hon. Members forget that we are subject to a legislature outside this House. The European Communities Act lays it down very clearly. That Executive takes advice and consults, but it does not consult this House; it consults the European Assembly.
The phrase "Parliament and people" has now gone into the political folklore of this country since the phrase was used by the right hon. Member for Sidcup (Mr. Heath) some time ago. I think that everybody in this House must recognise that Parliament and people are not bound by the Foreign Secretary's agreement to the September instrument. That instrument makes that quite clear when it states:
the provisions annexed to this Decision which it recommends to the Member States for adoption in accordance with their respective constitutional requirements".
This House has not ratified that document covering the principle of direct


elections. As my right hon. Friend the Member for Battersea, North (Mr. Jay) pointed out, it is arguable whether there is an obligation under the Treaty of Rome anyway.
It is now becoming clear that either one takes the view of my hon. Friend the Member for Belper and the hon. Member for Saffron Walden (Sir P. Kirk), and maybe of others, that we believe in a federal State, in giving effective legislative powers either to the Assembly or to the Council of Ministers and the Commission, and in becoming part of a larger federal State, or one does not. The problem is that many hon. Gentlemen on the Opposition Benches do not make clear which side of the fence they are on. Direct elections make sense only if one believes in a federal State.
Perhaps I may direct the attention of the House to the statement by the right hon. Member for Sidcup, as contained in The Times of 30th April 1975. He is reported as follows:
The first myth was that Community membership put the Queen at risk, he said in Chelsea. 'I say now that that suggestion is nonsense, total nonsense, and dangerous nonsense.'
We must look at that statement, because clearly it puts the Queen at risk, not in a personal physical sense but in the sense of the Queen in Parliament. That is the constitutional significance of direct elections.
We are bound under an obligation under Section 2 of the European Communities Act. We are bound to the Treaty. I shall read part of Section 2, because many hon. Members may not be aware of what it says:
All such rights, powers, liabilities, obligations and restrictions from time to time created or arising by or under the Treaties, and all such remedies and procedures from time to time provided for by or under the Treaties, as in accordance with the Treaties are without further enactment to be given legal effect or used in the United Kingdom shall be recognised and available in law, and he enforced, allowed and followed accordingly".
That is the obligation to accept inside this country direct legislation from outside this country. That is part of the European Communities Act, and it is part of what going into the Community means.
Legislation concocted elsewhere has to have a consultative procedure. The history

of the House was relate to its consultative powers joined to its powers of Supply and taxation. These powers have already been conceded by the system of direct resources to the EEC. We do not vote money out of the Consolidated Fund to the European Community. Direct taxation goes straight to Europe and the House does not control that. That is what happens now. Consultation before legislation is a historic function of the House, but it has virtually gone. We have consultation in Europe through an indirectly-appointed Assembly. That is where the official consultation takes place.
Of course we have our late night debates here, such as the one later tonight, for which we do not even have the necessary documents. The Minister will listen to our remarks on the taxation of road vehicles—a very important issue—but we are not properly consulted. If we want consultation, that should be the channel. That is how parliamentary democracy could really work. But if the Conservatives have their way and the electorate directly vote for people who will be consulted about legislation that will come from the EEC into this country—I mean consultation and not power—that consultation will short-circuit the House and the Queen in Parliament. The result of that consultation will be imposed on the Crown itself.
The Crown and the Queen's Government is a vacuum, filled by the majority party in the House. That would not be so in the case of the European Parliament, because it is not involved with the machinery of the Crown and its legislation is directly applicable to all British citizens and to British legal bodies, whatever the House may say or think. We found that in the matter of skimmed milk. We were able to do nothing about that.
The right hon. Member for Sidcup said at the time of the referendum that the position of the Queen was not at risk and that any such suggestion was
nonsense, total nonsense, and dangerous nonsense.
He was wrong. The position of the House and the Queen in Parliament will not be merely put at risk but will be destroyed by direct elections, because the system of consultation that took place here before 1640 will leave the House


and go to institutions across the Channel. Constitutionally, that cannot be gainsaid.
We must also consider whether the situation is worth that. I return to the remarks of the right hon. Member for Sidcup. I told him that I would be making these points today, and I hoped that as a great believer in direct elections he would be here today. Many hon. Members have said that direction elections would be worth all this to avoid the terrible risks of war. I do not decry that view. It is an honourable position, but it is trying to stop the Second World War which has already happened. The generation that fought and defended our freedom in that war, including the right hon. Member for Sidcup, were rightly obsessed with stopping the same thing happening again. But they ought not to judge the past and mix it up with the future.
The danger of a third world war is not between the old countries of Europe but between the Third World and the developed world, between the so-called rich and inward-looking blocs, of which the EEC is one, and the countries which, rightly or wrongly, are crying out for justice. That is where the dangers lie and where the problems will be. That is where the House and the country could play a positive, independent and proper rôle. If it is a matter of the Commonwealth against the Common Market, the House has already chosen the Commonwealth. The nations of the Commonwealth contain all sorts and conditions of men.
We see the problem that now exists in Rhodesia, and it may occur later in other parts of the world. There are elements within the Commonwealth that combine and cut across political views and aspirations, measures of wealth and levels of education. There is a band through the world of which the House and the country should be proud. If the country is to help to prevent a third world war, it will be through those institutions. We will not be able to help if the country is kept bound and captive inside a European federation.

6.27 p.m.

Mr. Paul Channon: I have only a few minutes in which to speak, so I hope the hon. Member for Newham, South (Mr. Spearing) will forgive

me if I do not comment on the points that he made. He would not expect me to agree with them.
The Government owe it to the House to come clean one way or the other. I think all hon. Members would agree with that need, whether they agree with direct elections or not. I want the Minister of State to answer one question. Do the Government intend to honour their obligations as spelt out by the Prime Minister and the Foreign Secretary, and, if so, how? Do the Government intend to honour the undertakings that have been given in frequent speeches to colleagues in Europe? It does not matter whether they were wise undertakings or not, although I think that they were wise.
There is increasing scepticism in the House and in Europe about whether the Government will honour those obligations. How will they get the legislation through the House in time? When will the legislation be produced? We have been told how tight the parliamentary timetable is and we do not yet see any sign of the Bill. In the final resort, the House has the right to decide whether direct elections should take place. It is intolerable that the House should be denied the right to express that view because the Government are letting the matter go by default and not presenting the Bill.
Both sides of the House want to know from the Government, fairly and squarely, whether they are going to come forward with the Bill. The Government should say whether they intend to break their word—for reasons that would be pleasing to some hon. Members—or whether they will go forward with the legislation to which they are committed, and which the overwhelming majority of hon. Members wish to have and will be prepared to support. When will the Government do this? It is not enough for them to say that they will honour their obligations. They must give evidence. We are not fools and we know the parliamentary timetable. The Scotland and Wales Bill is going through the House, so there is a shortage of time, and, unless this legislation appears soon, we shall know that the Government do not intend to honour their obligations.
I hope that the Minister of State will tell us tonight that the Government will publish the Bill within the next two or


three weeks, and that time will be given for it to go through the House. If the Minister does that he will be doing both the House and the country a good turn. It will be intolerable if we go away tonight without having had a clear and definite answer to that question, and I ask the House to insist upon it.

6.29 p.m.

Mr. John Davies: The House owes a debt of gratitude to my hon. Friend the Member for Harrow, East (Mr. Dykes) for raising this matter. I applaud him for doing so and I applaud the terms of the motion.
My hon. Friend the Member for Southend, West (Mr. Channon) has rightly put the matter with extreme urgency and emphasis. The House, and particularly this side, has great anxiety about the Government's intentions. They may be circumscribed by the problem of finding time in the House, but there may be more dubious reasons, and I think that the Minister of State ought not to miss this opportunity of relieving the anxiety and ensuring that it does not subsist.
What I have to say will pick up on large parts of what has been an interesting debate. Some parts were rather like listening again to an old 78 rpm record, but we have become accustomed to that in our discussions of Community affairs.
The internal reasons for urgency in this matter were fully dealt with by many hon. Members, although perhaps some did so inadvertently. One of the reasons for this urgency is the complexity of the arrangements which we shall need to work out before holding the elections. The hon. Member for Brigg and Scunthorpe (Mr. Ellis) considered this difficulty and reached the curious conclusion that the Government should break their word.

Mr. John Ellis: The point I was trying to make was that our Select Committee said that there would have to be a debate by last autumn. We do not have time to embrace all these issues seriously. That was the point of my Early Day Motion and the point which the Opposition have only just woken up to.

Mr. Davies: The hon. Gentleman is incorrect. There is still enough time to undertake this operation, but only if the

Government show the necessary degree of resolution, bearing in mind that their only alternative is to break their word.
There can be little doubt that if we are to work out the appropriate procedures for the elections to be held in May or June next year we have a great deal of work ahead. We have much more to do than have other countries. For example, France will vote on the basis of a single constituency for the whole country. Just think of the difference that involves in preparatory arrangements. The Government have to rescue their credibility, and they must do so at once.
There are also external reasons for urgency. The Government's handling of European activities in the past three years has not created great confidence among the other member States. If that were reinforced by a growing suspicion that the Government mean to welsh on their undertakings on direct elections it would have the most damaging effect on our interests.
There are so many issues of prime importance before the Community in which our interests are deeply involved. I need not recite them all; hon. Members will be able to think of so many. They include the important problem of fisheries; the impact of food prices on our agriculutral industry; the difficulties of our Minister of Agriculture, who has been arraigned by the Commission for breaching the provisions of the Community; and the problems of our pig producers who are in total disarray. There is also the question of developing, for the future, the regional and social funds, and political co-operation in areas of primary interest, including Rhodesia, Cyprus and the Middle East. These are all matters which we have a fundamental interest in seeing settled within the framework of the Community. If we created the belief that we are going to abandon our undertakings it would be intensely damaging for us in these and other areas.

Mr. Spearing: What the right hon Gentleman has just said is important, but let him suppose that there were 81 elected Members from the United Kingdom who were discussing all these matters. Where does he think that the discussions should take place, and where should the interested parties and pressure groups go to make their representations?

Mr. Davies: I shall come to that question. It has been of particular interest to me, and I shall not finish my speech before saying a word or two about it.
I wish first to deal with the difficult problem of the relationship between the European Parliament and the Westminster, or any other national, Parliament. No hon. Member would charge me with anything but a determined defence of the interests of Parliament over the Executive, whether that Executive is here or in the Council of Ministers. In the past three years, I have shown clearly my determination to ensure that Parliament has the greatest opportunity to voice its views on these matters, and it would not be in character for me to abandon that position. However, I must stress that the value of an efficient European Parliament to our activity is enormous. The House finds it virtually impossible to cope adequately with both the enormous stream of domestic material and the European legislative process. The European Parliament has complementary advantages to us. It would greatly facilitate our ability to exercise the sort of influence which we, as a Parliament, ought to exercise on our Executive, and to secure the right degree of impact on European legislation.
Members of the European Parliament have the opportunity, which we do not have, of speaking to those who formulate directives within the Community while the drafts are being formulated. We do not have that opportunity even in relation to our domestic legislation, but the European Parliament maintains a constant dialogue with the Commission and, through its committees, tries to improve the legislation and to bring into view national questions and ensure that draft directives and regulations take as much account as possible of the views of member States, as represented by the delegations. That Parliament has a capability which we neither can, nor should, have.
Another important factor is that the European Parliament can maintain that dialogue throughout the emergence and development of the legislative processes in the Community. Many hon. Members know how difficult it has been to keep up to date with the evolution of those processes. Members of the European

Parliament can exercise pressure on individual Ministers in the Council and through the Secretariat.
The advantages of the European Parliament are of great value to us co-operatively. It is a wild misunderstanding to believe that the European Parliament has competitive functions. On the contrary, it has complementary functions which can be made to work admirably. If hon. Members have it fixed in their minds that they will not tolerate such an arrangement, it cannot be made to work, but if they take my view, that this is an instrument which, if used properly, could ensure that the legislative system of the Community is kept under surveillance, the influence of the national parliaments within that organisation will be of the greatest value.

Mr. Marten: Will my right hon. Friend give way?

Mr. Davies: I cannot. I have refused many interventions and I am sure that I am about to deal with a matter which will interest my hon. Friend—increased powers and federalism.
Nobody could seek to identify me as a committed federalist. That is not my view. The Community will develop in all aspects with which nation States gradually find themselves unable to cope. Whether that leads to some form of communal government I do not know, but if it does, it will be long after I am gone. Over the years matters will arise which exceed the capability of individual nations effectively to control. For example, our shipbuilding industry faces problems. It would be folly to imagine that we could organise effective safeguards for that industry on a national basis. We must look for international solutions.
To those who complain that we are surreptitiously seeking to pass off to some external organisation the rights that we should exercise, I say that that is not so. What will happen is that certain matters will gradually exceed our capability, and we shall find that there is a body that is capable of dealing with those matters. The increased powers issue is a red herring. The powers of the European Parliament are circumscribed by the Treaties and some slender amendments which have been passed in the last couple of years concerning budgetary restraints.


There is little probability that these powers will be exceeded in the foreseeable future. My hon. Friend the Member for Banbury (Mr. Marten) is constantly referring to a phrase in the Tindemans Report, but he must remember that that phrase is a personal one and has been universally set aside by the Governments of member States.
The House would have to agree to any extension of powers. Such an increase in powers in the legislative and executive sense would require more drastic action in other countries. In Denmark, for instance, it would require a change in the constitution, and similar action would be required in France. Both countries would have to introduce major internal Acts. Not one of the French parties that is concerned with the future of the Community would subscribe to direct elections if the executive and legislative powers of the European Parliament were to be extended.
The powers of the European Parliament are those of influence. They will be exercised more effectively when Members are elected, and when the Community embarks on further external action, not least on political co-operation. It is important that we should have in the European Parliament people who are representative of constituencies in this country and who take an active part in our affairs. By virtue of the evolution of external foreign policy the Community will have a formidable rôle to play.

6.44 p.m.

The Minister of State, Home Office (Mr. Brynmor John): The House is grate-to the hon. Member for Harrow, East (Mr. Dykes) for introducing the motion, but his welcome for my appearance on the Front Bench was less than enthusiastic. I was a member of the Select Committee for a short time and I warn the hon. Member that when the legislation appears he will have to get used to my more frequent appearances. It is, therefore, not inappropriate that neither the Home Secretary nor the Minister of State, Foreign and Commonwealth Office is here to answer this Motion.
I shall set the framework in which the debate has proceeded, and I should proceed by making clear the Government's

commitment. On 20th September 1976 we said that we would use our "best endeavours" to hold the first elections in May or June 1978. Hon. Members have said that there have been other unspecified assurances, but that was the Government's commitment. The second commitment was contained in the Queen's Speech. It was to introduce legislation this Session. Since the Chamber will be more crowded at the end of the debate than it was at the beginning, I shall tell the House that we have no intention of abandoning that commitment to introduce legislation this Session.
No one can deny the importance of the issue or of the debate. It is a constitutional matter, and all legislation of that nature is bound to be regarded seriously. I was about to say that it is an issue which arouses deep passions, but it is unnecessary to say that of a European debate. If we lacked evidence of that today, we can certainly see the deep passion in the Early-Day Motions and in the wide differences of opinion. It is not necessarily a question of being pro-or anti-Market. One can be pro-Market without being in favour of direct elections, and one can be anti-Market without being against direct elections. When we are proposing to elect people for a five-year period, we must ensure that the arrangements are as good as possible.

Mr. John Ellis: My hon. Friend will be interested to know that one or two hon. Members who have signed my Early-Day Motion did so with the conviction that the issues involved were so important that there was not time to have direct elections by the stated date. They made that clear and said that that was the reason for signing the motion. My hon. Friend is right.

Mr. John: I am glad to have my point confirmed.
The importance of the issue has been highlighted by some of today's contributions. Some hon. Members have asserted that it is comparatively simple for the Government to rush forward with a Bill. One would have thought that there would be general agreement about the measure, but that is not so. We have heard speeches by the hon. Members for Inverness (Mr. Johnston) and for Surbiton (Sir N. Fisher). They challenged three of the


fundamental recommendations of the Select Committee's Second Report. They denied the first-past-the-post principle by disagreeing with the econstituency basis which was recommended by the Select Committee. Therefore, I should like to review the history of the matter and of the Government's commitment.
As I have said, on 20th September 1976 my right hon. Friend signed a decision of the Council, which dealt with the—

Mr. Marten: We know all that.

Mr. John: The hon. Gentleman may know all that, but I intend to put on record what the Government say on this issue, despite what he says. The point I am making is that the United Kingdom Government, like other Governments of other member States, attach very considerable importance to the "best endeavours" clause which they signed upon that occasion. However, it is equally right to point out to hon. Members, who have sought to suggest it—and some have done—that there is no binding commitment on any of them. The commitment is to use best endeavours.
Until a uniform electoral procedure enters into operation, the electoral procedure is governed by the national provisions of each member State. In view of the debate today, I hardly need stress the complexity of this matter. I stress that it is less than five months since that decision was signed on behalf of the Government. I do not believe that in a major constitutional issue it is very wrongful of the Government, or that it need excite considerable criticism, that they have thought it right to think carefully about the nature and the form of the legislation that they propose to introduce, on this occasion, because it is important.
What I have found singularly surprising is that the Opposition—here I disagree with my hon. Friend the Member for Brigg and Scunthorpe (Mr. Ellis), who said that the Opposition have never raised this matter; in fact, the Opposition were raising it within two and a half months of the instrument being signed—

Mr. Michael Grylls: Is the Bill now ready?

Mr. John: We are considering the form and nature and the content of the Bill.

Hon. Members: Answer.

Mr. William Clark: rose—

Mr. John: I do not intend to give way. I must get on to making some of the points that I want to make on behalf of the Government. At one and the same time, I am being invited to deal with the Bill and am then effectively being prevented from so doing.
However, I am coming to the points about the Select Committee, which, as has been said, started work in May. It produced its First Report, which was agreed to on 15th June, and it was debated on 12th July. As hon. Members have said, the Second Report, which deals with a number of very complex measures, such as the allocation of seats, the electoral system and the constitution of the constituencies, was agreed to on 3rd August but has not been debated.
Those are some of the matters that have excited controversy, not only between those of pro-Market and anti-Market persuasions but between even Opposition Members who support the legislation being brought forward. There are profound disagreements about that. If there is room for such disagreements between those who support it, that only heightens the importance of the Government thinking carefully about the legislation before it is introduced.
What the Select Committee did, at the end of its Second Report, was to recommend that a short Bill be introduced at the outset of the Session. From the start it was quite clear that the Select Committee was not at the end of its labours and that there were many things of great importance that needed to be dealt with by a third report. That is why the Third and final Report was published towards the end of November, and it was quite clear even on publication of the Second Report that what the Third Report would recommend would require legislation.

Mr. William Clark: I am sure that the Minister is not trying to blame the Select Committee for any delay. The delay has been on the part of the Government. I should like to ask one question. The Second Report recommended 81 Members for representation of the United


Kingdom. Why cannot the Government say what those 81 areas are in the United Kingdom? That is all that is being asked. One can argue about proportional representation and so on afterwards, but until we have the 81 Euro-constituencies no political party or Government can do anything.

Mr. John: I am sorry that the hon. Gentleman intervened, because I was about to make precisely two of the points that he made in his intervention. First, it was not part of my remit to blame the Select Committee, which worked on a very difficult subject with the utmost expedition. However, the suggestions in its Third Report, some of which extended the franchise, for example, to people living abroad, were matters of great controversy. I do not in the least say that the Select Committee was to be criticised for taking so much time. The inherent nature of the subject demands careful consideration before legislation is brought forward.
It is said that the only issue to be considered is that of the 81 seats, yet that is not what has been suggested today. Many other issues have been advised as being essential parts of this legislation. When we have a major constitutional Bill on the Floor of the House at present, what is being proposed is that there would be not one more major constiutional Bill on the Floor of the House but two such Bills, one coming very quickly and another later. I do not believe that that would have been possible in this Parliament. That was why we chose to wait until the recommendations were complete and to enshrine them in one Bill.

Mr. Dykes: Does not the Minister agree that that is totally unacceptable to most hon. Members? It goes back on the Government's commitment. What is the date for publication of the Bill to deal with the construction of the constituencies by the Boundary Commissions?

Mr. John: rose—

Mr. Jay: Will my hon. Friend give way?

Mr. John: No, I shall deal with the hon. Gentleman's point. [HON. MEMBERS: "What is the date?"] The point I wanted to make is that it does not

breach any of the commitments that the present Government have given to the hon. Gentleman. [HON. MEMBERS: "What is the date?"] We have said that we shall use our best endeavours. As I have reiterated today, we intend to honour that commitment.
The right hon. Member or Knutsford (Mr. Davies) himself said that it was perfectly possible to meet the date if legislation were to be introduced. The hon. Member for Harrow, East seems to have suggested that it should have been introduced last week. [HON. MEMBERS: "When?"] The Bill will be introduced when the Government's contemplation of the contents and the nature of the Bill is completed. That is the way in which all Governments deal with such matters, and right hon. and hon. Members know that that is the usual point that is made on such occasions.
Therefore, this is the answer that I give to the House. We do not intend to go back on our major commitments, and we have not gone back on our major commitment to the House, of using best endeavours and introducing a Bill this Session. That is what we propose to do. It does no good to the House to underestimate the complexities of these matters and to minimise the difficulty of the argument and the necessary time that will be taken on this occasion. We believe that consideration on one occasion rather than on two occasions is to the advantage of the House in considering this matter.

Mr. Hurd: Does the Minister accept that it is two years since 1978 first emerged as a date for these elections and six months since the Second Report? What the hon. Gentleman has said amounts to saying that the Government's best endeavours are nothing. When shall we see the Bill?

Mr. John: That does not mean that anyone other than a very blinkered observer of the scene—[Interruption.] It is only two months since the Third Report from the Select Committee, which raised the point about significant extensions of the franchise for these elections alone, was received by the Government. It is right for the Select Committee as well as for the House that these matters should—

Mr. Speaker: Order.

Hon. Members: Disgraceful!

It being Seven o'clock, the proceedings on the motion lapsed, pursuant to Standing Order No. 6 (Precedence of Government Business).

Orders of the Day — REDUCTION OF REDUNDANCY REBATES BILL

Order for Second Reading read.

7.0 p.m.

The Minister of State, Department of Employment (Mr. Harold Walker): I beg to move, That the Bill be now read a Second time.
This is a simple Bill with a straightforward purpose. It will reduce rebate paid from the Redundancy Fund to employers who have made payments under the Redundancy Payments Act 1965 to their redundant workers from 50 per cent. to 40 per cent. I hope that I will earn the gratitude of hon. Members who wish to take part in this brief debate by an equally straightforward and brief introductory speech.
I begin by referring hon. Members on both sides to the statement which my right hon. Friend the Chancellor of the Exchequer made on 22nd July 1976. As he made clear at that time, cuts in public expenditure and reductions in the public sector borrowing requirement were essential if the prosperity of the British economy was to be restored and the level of unemployment was to be reduced. He also pointed out that a shift of emphasis towards selective assistance to industry would require certain savings in expenditure, which included a reduction in the employer's rebate from the Redundancy Fund from 50 per cent. to 40 per cent.
Some of this assistance has been given already. For example, the prospects for manufacturing industry have been greatly improved both by the lower taxation resulting from generous stock relief and by the relaxation, especially increased investment relief, recently announced in the Price Code. These improvements have to be paid for, however, and the Bill has a small but not insignificant part to play in the public expenditure programme which is so vital to our economy.
The Explanatory and Financial Memorandum to the Bill quotes a figure of £18 million as the saving to the Redundancy Fund; that assumes a full


year's saving for 1977–78. It is impossible, of course, to pin a precise figure to the saving which will be achieved over a full year. Many things can affect the number and the amount of individual payments from the fund over a given period of time. Levels of unemployment are an important factor, but only one.
Many redundancies are caused by other factors, such as the long-term adjustment of industries to changes in demand or rationalisation in the course of changes in the industrial structure. Perhaps the most important factor of all affecting the amount paid from the fund is the level of individual payments, which depends in turn on the age, length of service and earnings of those made redundant.
With all these variables, even although it is possible to draw heavily on previous experience over the life of the Act, it is impossible to do very much more than make rough-and-ready estimates of future demand. I say this without apology to the House. It is intended to be no more than a statement of fact. But I think it important for the House to be made aware of at least some of the factors involved and the reasons why it is impossible in this instance to give a really accurate forecast. Nevertheless, it is fair to say that the figure of £18 million is the most realistic which it has been possible to calculate in the light of previous experience.
Another point to which full consideration has been given is the effect which the proposed measure will have by adding to employers' costs. It would, of course, have been possible to produce savings in a number of ways ranging from a general reduction in the level of redundancy payments to abolishing the rebate to employers altogether. But here I think it may be appropriate to recall the original objectives of the statutory scheme. From the outset it was intended that the statutory payments should be financed partly by employers directly and partly by employers collectively through a Redundancy Fund. At the front of the minds of those of us who helped to take the Redundancy Payments Act through Parliament was the need to secure adequate compensation for workers unfortunate enough to be made redundant.
For us at least, the first course—that of reducing payments—is unthinkable, Before the 1965 Act was introduced, employees could be thrown on the scrap-heap with no compensation for all their years of service. The legislation did a great deal to remedy this patent social injustice, and I do not think that any Member of this House would care to argue a case in public at present in an attempt to justify the abolition or reduction of the statutory scheme.
Whether it is right that employers should benefit by way of rebate—and, if so, to what extent—is open to debate. However, it is clear that, if the cost of a redundancy payment to the individual employer is too high, desirable changes may be inhibited. What we have tried to do is to strike a balance. Admittedly there will be some addition to employers' costs. Taken overall, however, the effect will be small. It represents no more than approximately 0·03 per cent. of the total amount of wages up to £95 a week in respect of which employers are required to pay the secondary class 1 earnings-related contributions; or, to put it another way, approximately 1·8p a week for every £60 of wages on which the earnings contributions are payable.
It is also easy to overestimate the effect which this reduction will have on individual employers. The maximum statutory payment at present is £2,400—that is the entitlement of a man aged between 61 and 64 earning more than £80 a week after 20 years' reckonable service. This gives a maximum rebate of £1,200, which will be reduced by the Bill to £960—in short, an additional cost to the employer of £240, representing three weeks' pay or less. In more general terms, the average current rebate is of the order of £310, which will be reduced by about £62, which is broadly the equivalent of a week's pay in many cases.
We have also sought to strike a balance in the context of the Chancellor's July package. Some saving is necessary, and we have looked to employers for this modest further contribution. It is an integral part of the July package, which was carefully devised so as to do the least damage, bearing in mind the need to preserve social and economic priorities and to ensure a reasonable balance between the different elements whilst encouraging an upturn in the economy.
Given the importance which the Government attach to maintaining a reasonable level of compensation for redundant workers, perhaps I should mention a useful improvement in the coverage of the scheme which took place on 1st February. Until then, only employees working 21 hours or more a week were covered. As from last week, the qualifying hours were reduced from 21 to 16 and, in addition, the cover was extended to employees who have worked continuously for the same employer for at least five years at eight hours a week or more.
This is a useful improvement—I know that right hon. and hon. Gentlemen will recall that we discussed it during the passage of the Employment Protection Act. The part-time employee is a feature of modern industry. Many of those affected are women. Although their earnings may not be as large as those of full-time employees, they are frequently an essential part of the family income, or indeed, in some cases, the only source of income. Redundancy for these part-timers can be as unfortunate in its effect as for the full-time worker. One has only to look at the distress which can be caused by redundancy amongst, say, the part-time textile worker of Yorkshire and Lancashire to appreciate the truth of what I am saying. This is a valuable improvement and one which I am well pleased to be able to draw to the attention of the House.
One special feature of the Bill which will not have gone unnoticed is that it will amend the Northern Ireland legislation. There may be some in the House who may not be familiar with the position. I should explain that Northern Ireland is not covered directly by the Redundancy Payments Act 1965 but is covered by parity legislation contained in the Contracts of Employment and Redundancy Payments Act (Northern Ireland) 1965. In practice, however, the two schemes are operated as a single system, as provided for in Section 58 of the 1965 Act.
In more settled times, it would have been appropriate for Northern Ireland to follow the precedents of the past and seek parity legislation for a reduction in rebate. It could still be done today through the Order in Council procedures, but it was considered that such a process would be relatively tedious and time-consuming and not in the interests of the best use of the

time of the House. Accordingly, Clause 2 of the Bill does no more, in effect, than apply the reduction in rebate to the Northern Ireland scheme in exactly the same way as it will apply in Great Britain. This will ensure that the reduction in rebate takes effect both here and in the Province from a common date, thus removing the risk of anomalies.

Mr. John Page: Can the hon. Gentleman give us an idea of the redundancy in Northern Ireland as compared with that in the United Kingdom as a whole?

Mr. Walker: I apologise to the hon. Gentleman and to the House. I require notice of that question. No doubt my hon. Friend who will reply to the debate will try to obtain the information in the meantime.
Perhaps some indication of the relationship between the pattern of redundancy and redundancy payments in Northern Ireland and that in the United Kingdom as a whole can be obtained from the Explanatory and Financial Memorandum, which states that there will be a reduction in expenditure of £18 million for Great Britain and that the corresponding reduction in expenditure in 1977–78 in Northern Ireland will be £¼ million.
To conclude, the aim of the Bill is to help to achieve cuts in public expenditure to which this Government are committed. It forms part of a package deliberately constructed so as to spread the burden with the least possible damage. It in no way affects the rights of the redundant employee, nor is it in conflict with the purpose of the statutory redundancy scheme as a whole. I ask for the support of the House for this measure.

7.12 p.m.

Mr. Barney Hayhoe: This is a curious measure. The Minister of State's speech, although it explained the mechanical details of the Bill with clarity and precision, nevertheless left the intention of the legislation in great doubt.
The Redundancy Fund was established in 1965. Its aim was to take the sting out of redundancy in two ways—by giving the person made redundant reasonable compensation by way of financial payment, and by shifting part of the cost of making such payment from the employer


of the person being made redundant to a charge on all employers. Both sides of the House then thought it right that the arrangements should be made that the costs of providing the cash payment on redundancy should, at least in part, be a burden on industry as a whole, and that firms which were expanding should take some share of the costs of providing that compensation to individuals who were being hurt by losing their jobs in the country's contracting industries.
I have refreshed my memory by reading the speech which was made by Mr. Gunter, the then Minister of Labour, when he introduced the measure. The fund when instituted was to be self-financing by means of a levy on all employers. The fund, though being collected through the national insurance system, was nevertheless to be kept entirely separate from the National Insurance Fund and separate accounts were to be kept. If the fund was in deficit it would have to pay interest. If it was in credit, it would earn interest. It was a self-contained fund.
That principle has been faithfully adhered to over the 10 years of the existence of the scheme. Over that period about £500 million has been paid out through the fund, which means that about £1,000 million has been paid to individuals who have become redundant.
Now the very basis of the scheme is under attack. It looks very much as though the Treasury—the Minister's speech did not detract from this in any way—is seeking to make a profit out of the Redundancy Fund. If the Minister can give us an absolutely categorical assurance that the levy will be reduced by a similar amount to the rebates, it will mean that at least the Treasury will not be making a profit out of the fund, but if the Minister gives a categorical assurance that the levy will be so reduced, it will make total nonsense of what the Chancellor of the Exchequer said on 22nd July 1976. So whichever way the Government go they will get this wrong. The Chancellor said this:
This shift of emphasis towards selective assistance to industry will require savings in expenditure of three kinds. First, Regional Employment Premium"—
was reduced. Hon. Members will recall that it was very precipitately withdrawn

later in the year. Its withdrawal caused considerable distress to those who were benefiting from it, as we heard in last Thursday's debate. The Chancellor continued:
Second, we shall introduce legislation to reduce the employer's rebate from the Redundancy Fund from 50 per cent. to 40 per cent."—[Official Report, 22nd July 1976; Vol. 915, c. 2014.]
As the Minister said, this is the measure which is to give legislative effect to what the Chancellor then said. If the Chancellor meant anything by what he said—that the Government were making savings in expenditure—the presumption must be that he hoped that the money which was not to be paid out in rebates would be used elsewhere. If the Chancellor was merely talking of a wholly pernickety, bureaucratic, legalistic interpretation of public expenditure—that in relation to a fund which is a self-contained entity some merit attached to the Government for paying out a little less from the fund because a little less would be paid in and that of itself would affect the economy—clearly the Government were living in cloud-cuckoo-land.
If the Government proposed to reduce the levy on employers generally, to make more funds available for industry, by reducing in effect this payroll tax from about 0·2 per cent. to 0·16 per cent. or 0·17 per cent. while at the same time imposing a payroll tax of 2 per cent. on industry—that was economics gone mad. How absurd if the Government made this minuscule saving and claimed merit for it at the same time as they placed an immense new burden on industry, in the shape of the 2 per cent. payroll tax.
It is necessary to look at this small and relatively insignificant measure in the context of the statement the Chancellor made last July. The House will remember, even if the Chancellor and his advisers and friends would prefer to forget, what the Chancellor then said. The Chancellor said that the measures he had announced—the package, including the change in Redundancy Fund rebates—
will enable us to maintain steady and continuous progress towards full employment without refuelling inflation".—[Official Report, 2nd August 1976: Vol. 916, c. 1237.]


what splendid words—
steady and continuous progress towards full employment without refuelling inflation".
The inflation position in prospect has got much worse since the Chancellor was speaking. As for what he said about
steady and continuous progress towards full employment",
if we look at the seasonally adjusted figures, in July 1976 there were 1,295,000 unemployed in the United Kingdom. After six or seven months of
steady and continuous progress towards full employment",
in January 1977 there were 1,345,000 unemployed in the United Kingdom. In other words, unemployment has gone up by about 50,000 during that period.
The Chancellor, not for the first time—nor, I fear, for the last—got it utterly and completely wrong when he forecast the results of the measures. When he introduced that package of measures, including this Bill, he could then talk about unemployment coming down to 3 per cent. in 1979, because he told the House that we must achieve these aims
if we are to get unemployment down to 3 per cent. in 1979."—[Official Report, 2nd August 1976; Vol. 916, c. 1239.]
That 3 per cent. meant about 700,000 in 1979. Yet now we have the Secretary of State for Employment giving credence over the weekend to a figure of 2 million. According to the Daily Telegraph today, the right hon. Gentleman has got into hot water with his Cabinet colleagues for muttering about 2 million. If that leak is right, he should have been speculating about unemployment being 1,700,000, with that being the figure to which unemployment might rise.
Yet this Bill was brought forward in the context of Government policies which, it was said, would lead to a reduction in unemployment to about 700,000 by 1979. Ministers of the Crown are working a very cruel deception upon the people of this country by pretending that that target has any hope of achievement now. The sooner the Government come clean and realistically tell the House what they see as the likely change in the employment pattern in this country in the next few years the sooner we can begin to tackle these problems constructively.

Mr. Max Madden: Does the hon. Gentleman agree that for a very long time the right hon. Lady the Leader of the Opposition and the right hon. Member for Leeds, North-East (Sir K. Joseph), who are leading members of an economic institute closely aligned with the Opposition, were saying that unemployment was consistently much less than the official figures would have us believe? What is the lowest figure according to the institute, and what are the institute's projections for unemployment?

Mr. Hayhoe: I am sure that the hon. Member for Sowerby (Mr. Madden) is better informed than I am on this point. We can change the definition of unemployment and get practically any figure we like. I am content to rest on the official figures, even though I know their weaknesses.
Since the hon. Gentleman has raised the question of tampering with figures, perhaps I may comment on someone who has been tampering with them considerably. In last week's debate on the North-West the Minister of State put forward an absurd pretention. After grubbing around somewhere in the mud of statistics in his Department, he produced a figure to try to show that unemployment was higher in 1972 than it is today. The only way in which he could obtain such a figure was by including people who were temporarily out of work because of the miners' strike. Yet the Minister, who is supposed to be concerned about the most serious unemployment that we have known for more than a generation, came out with this absurd figure. If any criticism is to be directed against anyone for mucking around with statistics and trying to use them in a misleading way the medal should be pinned firmly on the chest of the Minister of State. It would be much better if he used whatever inventive and imaginative abilities he may have for devising ways of creating genuine job opportunities rather than producing phoney arithmetical alibis for the present awful level of unemployment.
I sometimes wonder whether this Bill is the result of mistaken figuring by Ministers. Looking at the figures from January to June 1976, for the amount that was left in the Redundancy Fund over that period—

Mr. Harold Walker: The hon. Gentleman really has sought to put the boot in with a vengeance. I am glad to see that my thrust obviously went home as it was intended. The hon. Gentleman ought to be a little fairer to me and acknowledge that I have always pointed out that the 1972 figure was on a different basis of calculation. The point that I made in the debate on the North-West was that, if we had the same basis of calculation now as we had then, the present level of unemployment in the North-West would be less than it was then. The hon. Gentleman has made the point that was made by his right hon. Friend the Member for Sidcup (Mr. Heath)—that the figures were artificially inflated by those who were temporarily on strike. The right hon. Member for Sidcup had to come to the House the following day and apologise for saying that.

Mr. Hayhoe: If the Minister of State looks at the figures in the Department of Employment abstracts, under the heading of "Unemployment" he will see that the figure in 1972 did not go above 1 million. The hon. Gentleman is now providing an excuse, saying that he had some reservations. Yet, in the debate last week, he said:
If Conservative Members want the facts and figures they can have them. In 1972 the official figures showed that there were 1½ million unemployed."—[Official Report, 3rd February 1977; Vol. 925, c. 878].
There were no parentheses in the Minister of State's statement and no explanation. I accept that later in the debate he referred to the different way in which the figures were calculated, but his reference to 1½ million, if it means anything at all, and if he is not just playing about with figures, can only mean that he was seeking to show that unemployment in 1972 was a worse problem than it is today. That is utterly wrong.

Mr. Harold Walker: If any hon. Member went to the Library and looked at the Department of Employment Gazette for February and March 1972 he would see that the official total of unemployed in the United Kingdom was approximately 1½ million. It is open to any hon. Member to take a short stroll to the Library to get confirmation of that figure.

Mr. Hayhoe: The more the Minister of State goes on with these explanations the less convincing he becomes.
In 1972 adult students were included in the raw total figure for unemployed, but now, by common consent, we have excluded them because we do not think that their inclusion gives a reasonable measure of unemployment. If the Minister of State wanted to grub around in the mire of statistics to produce a figure which concealed the truth, I accept that he was very successful. That is what I am criticising, for he should have the honesty to accept that unemployment is much worse now than it was in 1972 and he should not seek to hide behind a phoney figure, as he has done.
I now turn to the figuring on which the Bill seems to be based. If we look at the monthly figures from January to June 1976 we see that the fund started in January with a deficit of about £60,000 and that by June it was up to £7·6 million. The figure was for 25th June, which would have been the last figure available when the Chancellor was putting together his package which he announced on 22nd July. By then the figure was £7·595 million—let us say £7,600,000.
If one takes an average one finds that over the five months January through to June there was an increase of £1½ million a month. If one converts that into an annual rate, it appears that the fund was going into deficit at a rate of £18 million a year. How extraordinary that a measure which flows from what the Chancellor said on 22nd July is now intended to change the outgoings from the fund by not £15 million, or perhaps £20 million, but precisely £18 million a year.
Could it be that at that time, looking at the trend in the figures and considering the best information available, those concerned saw the fund going into deficit and asked themselves how they could overcome that and decided that it could be done by putting an extra impost on industry, as has been done in the past, by lowering the amount of money statutorily paid out for redundancy payments, or by changing the level of the rebate?
If they did that, what is so interesting is that the apparent growing deficit, running at an annual rate last July of £18


million, was based upon phoney figures, because when corrections were made later in the year one discovered that, instead of the fund ending the year heavily in deficit, it ended £5·27 million in credit, and it looks as though the fund will stay in credit even after meeting the increased outflow resulting from the insolvency provisions of Sections 63 to 69 of the Employment Protection Act which have been activated. On looking at the figures, which have been made available by the Department in response to Questions from myself and one of my hon. Friends, the impression that one gains is that the fund will probably stay in balance, and perhaps even gain a little, unless there is a rapid change in the number of people becoming redundant.
If unemployment were to rise sharply and many more were made redundant the charges on the fund might be great, and one must ask: What is the logic behind the Bill? Is it that, deep down in the recesses of the Department, it is being decided that it looks as though unemployment will continue to rise and that the charges on the fund will continue to increase because of a rising number of people becoming redundant? If that is so, the Minister of State was singularly reticent in putting the true reasons before the House.

Mr. John Page: I have been listening carefully to my hon. Friend's brilliant indictment of the Government as he has lifted sheet after sheet and found the wormeaten pages underneath. Has he been able to discover whether there is any relationship between every 100,000 workers unemployed and the outgoings of the fund? That kind of graph might help.

Mr. Hayhoe: I think there is little doubt that there is a relationship between the numbers becoming unemployed and the numbers becoming redundant. I have not done the necessary mathematical analysis, but if one looks at the figures one sees that there was a larger outflow from the fund, a larger number of payments to those becoming redundant, in 1975–76 than in 1973–74. The last sharp rise in the number of redundancies in any one year was in 1971. My hon. Friend will remember that there was rising unemployment then, which peaked in about the beginning of 1972.
An inspection of the figures would lead one to believe that there was a relationship between unemployment and redundancy, but I hope that the Minister will be able to get from his Department a more carefully worked out mathematical judgment of this. In dealing with statistics of this kind it is always wise to look at them extremely carefully because sometimes a superficial relationship does not hold up if one looks at the situation over a longer period. At a time when unemployment is rising sharply and when, as a result, firms are losing employees, the numbers coming forward and calling for redundancy pay are likely to be much higher.
From an economic point of view there is no justification for the Bill, because there is a question mark hanging over the figures upon which it is based. The argument is that in some magical way the Bill will affect public expenditure, whereas in fact it is a self-contained fund. The revenues raised by the charge on all employers are more closely tied to the fund than are most moneys that flow through the Government. One could describe them as assigned revenues, because they can be used only for payments made out of the fund—unless, of course, deep within the Government there is the idea that this is a way of reducing their borrowing requirement, of building up a profit out of the Redundancy Fund. Alternatively, they may believe that the outflow from the fund will increase considerably because of increased redundancies. If that is the situation, the Government have been less than frank with the House.
I think that the Bill will have an adverse effect on local authorities throughout the country. No doubt the Minister will have received, as have many hon. Members, representations from the Association of County Councils. It may be that the association reflects a view that is shared by other local authorities. Members of that association have expressed concern about the possible effects of the Bill upon local government finances. They think that it will place additional costs upon local authority employers, to the relief of the Exchequer, and they point to a particular case where they think there will be an extra burden of £4,000 a year on a county council.


They regard the whole proposal as particularly unwelcome at a time when Government expenditure restrictions make some redundancies inevitable in local government. The association has, therefore, placed on record its reservations about and opposition to the Bill.
Another argument that has been produced by some commentators is that the Bill may help to save jobs. This is standing logic on its head—but that is no new thing for Ministers to attempt. What is being suggested is that by amending the provisions of the Redundancy Payments Act it will be made less likely that people will become redundant. Even by the Government's standards this is a curious argument, although it may well be that some believe that this scheme, by its nature, has made it more difficult for firms facing cash-flow problems to achieve the redundancies they believe to be desirable. Perhaps firms will maintain their employees and gradually run themselves into insolvency as a result of this Bill.
It is an unjustified, irrelevant, irritating Bill, which, I hope, the Government will withdraw, and I hope they have second thoughts about the whole basis upon which it is built. Why do the Government not hold proper consultations about the vital questions of overmanning, retraining and labour mobility? Let them have consultations with the CBI, the TUC and others concerned. It must be reasonable to ask why no other industrialised country has seen fit to follow our example of a redundancy payments scheme. It is not because other countries are not concerned about the problem of redundancy. It is because, in their judgment, they have found better ways of dealing with the human misery and the dislocation in industry and commerce which can follow redundancies.
Since the Redundancy Payments Act has been in being for over 10 years, I believe it would be sensible to carry out an intensive review to see whether it has achieved its purpose. Kenneth Barnes, now Permanent Secretary at the Department of Employment, is reported as having said of the Act in May 1975 at a PEP conference:
It is impossible to say if it has been a success.

If that was translated out of Civil Service-speak it might even be accounted as an outright attack on the measure. To say that it is impossible to say whether it has been a success may well be an indication that there are grave doubts within the Department as to the usefulness of this measure. It would be a good idea to have a review of the way in which the Redundancy Payments Act has worked for the past 10 years. Of course it has worked to some extent; all hon. Members will accept that. The preparations for the Act were made by a Conservative Government and the measure was introduced in 1965 by a Labour Government. Over the years it has been changed, generally by agreement.
The time has come to look at the way in which we deal with redundancy. Over £1 billion has been paid out in the past 11 years. It is estimated that between 7 per cent. and 10 per cent. of those who are unemployed have received a redundancy payment, but cash payments are by no means the only way or even the best way of dealing with redundancy. That is the experience of other countries. Job placements and transfer arrangements are of great importance. There should be particular emphasis laid on the older worker who, when he becomes redundandant, often finds it much more difficult to get another job. Although he might get a high cash payment under the scheme it may be that we are not being sufficiently flexible nor taking full account of the increased difficulties facing such a person. Have we got the right balance between the amount paid in cash to the redundant worker and the resources available for retraining? During a recent visit to Sweden I was impressed by the comprehensive action taken there by the local Labour Market Boards to deal with the redundancy situation. It is possible that we could benefit from the experience of Sweden and other countries with which we have close ties.
This Bill threatens the basis of the present Act without putting any constructive alternative in its place. The economic arguments for the Bill on public expenditure grounds are nonsensical. All the evidence points to the fact that the Bill arose from a misconception as to the state of the balances in the Redundancy Fund. If the Minister does not have the good sense to withdraw the


Bill, think again and hold proper consultations with all concerned, the Opposition must register their criticisms in principle and in detail of this unnecessary and unwanted little Bill.

7.47 p.m.

Mr. Ian Wrigglesworth: I was pleased that towards the end of his speech the hon. Member for Brentford and Isleworth (Mr. Hayhoe) made some constructive suggestions. He has made a great deal out of what he has admitted to be a small measure. For a large part of his speech he made much out of nothing. I regret that he seemed to have caught a dose of the disease which might be called "Oppositionitis" whereby Opposition spokesmen feel that they must oppose for opposition's sake. They accuse Ministers of saying and doing things which they themselves have done when in Government and which they would be doing at present if they were the Government now. The country has had enough of that sort of thing.
The hon. Member for Brentford and Isleworth tried to make something out of the Secretary of State's comments about the level of unemployment. I know that the unemployed in my area will not be impressed by politicians comparing the records of unemployment of one Government with those of another Government. My constituents are very much aware of the high level of unemployment, as is every hon. Member. We ought not to be looking at past records or ways of gaining a party advantage. Instead, we should be searching for constructive proposals. It was fairly obvious from the hon. Gentleman's comments that he had not heard the statement made today by my right hon. Friend concerning the figure of 2 million unemployed. This was not a figure which my right hon. Friend gave as a forecast but one which was put to him.
I very much agree with my right hon. Friend's remarks that Governments cannot forecast levels of unemployment. No one could have forecast what is happening in the United States at present. The freeze-up there will slow down the economy of the United States, which in turn will have an impact upon prospects in Europe. We cannot forecast the outcome of the economic talks between the Heads of the United States, Japan,

Germany and other Western countries later this year. We may be able to get more growth out of the economies of Japan, Germany and the United States, which will bring increased growth to our economy and help reduce unemployment.

Mr. David Mitchell: Is the hon. Gentleman saying that the Chancellor of the Exchequer was conning the TUC when he said that unemployment would come down to 3 per cent.?

Mr. Wrigglesworth: I am not saying that at all. I am saying that over many years Governments, whether Conservative or Labour have not made forecasts of unemployment figures. To try to make a party point out of the bogus figure which has been floating around in the Press in the past few days seems to me irrelevant. It is not something that the unemployed in my part of the country will be very much impressed by.
I speak as a Labour and Co-operative Member, sponsored by the co-operative movement, with which I have had a long association. I am sponsored by the North-Eastern Co-operative Society, one of the largest societies in the country, and I was a director for three years of another large co-operative society in South London, the South Suburban Co-operative Society. I have had a great deal of political involvement at both national and local levels in the various co-operative societies in whose areas I have lived. Speaking very much as a co-operator, having talked to people from co-operative societies and heard their views about the Bill, I regret the necessity for the Government to introduce it. I shall be a reluctant supporter of the Bill tonight, but because it flows from the Government's economic strategy it will have my support. However, I should like my hon. Friend the Minister to consider some of the points which co-operators have put to me and to reconsider some aspects of the Bill.
The Redundany Fund is financed from contributions by employers in respect of workers covered by class 1 contributions, at the rate of 0·2 per cent. of their earnings. The costs of collection by the Department of Health and Social Security and other Departments are a charge against the fund income. For the year ended 31st March 1976, collection costs were £1·4 million against an income of £89·6 million. I put down Questions to try


to obtain more information about the matter, and it is fairly clear from the answers that the cost of collection has increased markedly over the years. As a percentage of the contributions collected, the costs have risen from 0·6 per cent. in 1970 to 1·6 per cent. in 1976.
The percentage of collection costs each year has increased very erratically. For instance, in 1970 the cost of collection increased by 25 per cent. In 1971 the increase was only 4·5 per cent. In 1974 it increased by 70 per cent., and last year it increased by 63 per cent. There seems to be a wild variation in the cost of collection. Are the collection costs monitored to ensure that they are reasonable? Can they be reduced? Why have they increased in this unsettled way from year to year?
Secondly, I should like to press my hon. Friend on the question of the interest paid by the Government on the fund. When it is in surplus, the fund is invested by the National Debt Commissioners as directed by the Treasury. The fund interest in 1976 was £693,000. Are the best rates of interest being paid by the Government for the use of the fund? How do they compare with commercial rates?
In 1974–75 the interest payable on the invested surplus was 5½ per cent. in Treasury stock, I was told in answer to a Question. Does that mean that 5½ per cent. was paid on the fund, or was the yield higher because the stock was bought for less than the nominal £100?
The Government also said in reply to that Question that in addition there was short-term investment each year in Treasury bills at a rate of interest equivalent to the then current minimum lending rate or in very short-term investment in Ways and Means advances at a rate ½ per cent. below the minimum lending rate. I hope that my hon. Friend can shed light on the matter and assure the House that the best rates are being paid.
Thirdly, I should like to press my hon. Friend on the administrative expenses of the fund, which are paid mainly to the Department of Employment. In 1976 they were just over £3 million, an increase of £935,486 over 1975. Again, I have figures from my hon. Friend in reply to a Question which show that there have

been odd increases, and even a decrease, in the cost of administering the fund. Overall there was an increase between 1970 and 1976 from 2·2 per cent. to 3·4 per cent. in administrative costs as a percentage of the fund's total income. But in 1973, for example, the administration charge dropped by 1·6 per cent. Last year it went up by 44·1 per cent. In 1966 it rose by 69·8 per cent. These figures are very difficult to understand.
There is another serious point I should like my hon. Friend to examine, although he may not be able to respond fully tonight. Co-operative societies are reasonably generous about redundancy pay. Several local understandings have been reached with trade unions to give better payments than the Act requires, after taking the rebate into account. When the rebate is reduced—the Bill proposes that it should be brought down to 40 per cent. —generous employers must pay more to implement local understandings. That is obviously an unfair and undesirable state of affairs because it encourages the less generous employer, and both as a co-operator and trade unionist I and many of my hon. Friends would be opposed to that. It seems to me contrary to the whole principle of the scheme. We want to encourage employers to pay as generously as possible. I should like my hon. Friend to give an assurance that he will reconsider the matter and see whether changes can be made to overcome the problem so that generous employers are not penalised.
Will the Minister consult the co-operative movement and other employers and trade unions on this point in order to get their views? There was no consultation about the proposals contained in the Bill, and I think that it would be well received if the Government could consult to see whether this point and the others I have raised could be discussed with the interested parties, together with the whole operation of the fund, in order to see whether it could be improved both in the interests of employers and in the interests of trade unions.

8.0 p.m.

Mr. David Mitchell: We are discussing a Bill which aims to reduce the rebates of the Redundancy Fund by increasing the costs of redundancy to the employers.
First, I question whether the system of redundancy payments that we have is the best way to help the worker and to get value for money. Secondly, I want to consider the effect of what is proposed on jobs, particularly those provided by small employers. Thirdly, I want to raise the question of the need for companies to be able to make reserves against their contingent liability to make redundancy payments, which are clearly going to be substantially higher than in the past.
In the 1964 White Paper the whole concept of redundancy payments was spelled out:
an active policy to make it easier for workers to change jobs in accordance with the needs of technological progress ".
When one looks at the way the fund is operating one wonders whether it is doing that. Redundancy affects everyone differently; the needs and the problems which have to be overcome by each person are different. Redundancy is a human, personal and individual problem, and varies from person to person in its effects.
For example, one person may be lucky. Having been made redundant he may cross the road and get another job in the following week, even, perhaps, at a higher rate of pay. I am not saying that that is likely in the present situation, but it happened many times in that period of prosperity which we enjoyed a few years ago. When it happened, such a person was still entitled to claim quite substantial sums in redundancy payments even though he was better off as a result of changing his job. When, by contrast, a hapless fellow is weeks or months or—and he will be, if this Government continue in office—years out of work, the circumstances are wholly different. If he has young children, for example, the expense and the problems associated with redundancy and unemployment are very much greater. It may mean that he has to move from one part of the country to another. Again, an older man who has savings may get a well-paid job after a few weeks, whereas a younger man with children faces appalling problems in a tumbling standard of living as his unemployment continues.
One sees a major fault in the whole system. The fund pays someone according

to how long he has been in a job and not according to the difficulties and problems he faces in moving from one job to another following redundancy. We should be asking ourselves whether it would not be better to roll redundancy payments into wage-related unemployment benefits and retraining. In such ways can we help the individual according to his circumstances and not, as the present system operates, according to how lucky he has been in the length of time he stayed in his previous job.
Quite apart from that, there is the whole question of mobility. When trade picks up we shall need greater mobility of labour. It is certain that when the economy starts to recover it will not be the firms which were on the crest of the wave during the last boom which will be the big uptake of employment; it will be different firms, in different industries, with different products, the growing and expanding firms.
The problem of the present redundancy payments system is that it locks a man into his job. When a man who has been in his job many years moves to another, it involves a risk. He may go to a better job in an expanding firm, and then something goes wrong—for example, the Government change their policy on value added tax—and suddenly what appeared to be a better prospect becomes a period of unemployment. In such circumstances the man who has been only a couple of years in that new job does not get a penny, whereas the man who has stuck to his old job for a long time is paid a substantial sum, even if he then is able to cross the road and get a better job.
This cannot be the right way to help people at the time that they need help, which is when they are unemployed, and not necessarily when they move quickly from one job to another. The way in which the Act is now operating is a prescription for immobility, and will be against the interests of the economy when trade starts to pick up.
Then there is the effect on jobs, particularly in the smaller firms. I want to examine two items—cost and when the cost is incurred. I believe that the Government have got it wrong. I say that with respect to the Minister of State who, I know, has the very best of intentions. Unfortunately, good intentions will not be sufficient. This measure will cost £18


million a year, and one may say that that is a fraction of industry's costs—and so it is; but fractions add up, and that tends to be overlooked. This increase comes on top of the £8½ million in 1968, the £17 million in 1969, the increases in corporation tax, the increase in the "jobs tax"—the 2 per cent. national insurance levy starting in April—and the sudden and unexpected ending of the regional unemployment premium. There is a grave risk that this new increase will be the last straw to break many small business camels' backs.
I say that because of the timing at which the expense is incurred. This payment hits a firm at its worst possible moment. It is staggering under the misfortunes of the economy and the incompetence of the Government. It regretfully has to reduce its labour force—and whatever rude remarks hon. Members opposite like to make about capitalists, no capitalist makes a profit out of not having his factory working or his work force at work. When the employer regretfully decides that he must reduce his labour force, that is the time of acutest economic and financial pressure on the firm. It is then that it has to pay out the money. My fear is that the firm will be driven into bankruptcy by this measure instead of surviving in a slimmed-down form and then taking on more people when the opportunity comes. The liability will be substantial in terms of having to pay for a large proportion of its men, and it may not be able to continue trading.
An example of where this will actually hurt in the next few months is to be found in the building and construction industry where, by deliberate planning or otherwise, the Government seem determined to put the boot into small builders. We have the deliberately announced intention of left-wing members of the Government to extend the direct labour organisation of local councils so that they will get building contracts instead of the established firms in the building industry. The result will be that small building firms will go bust. They will have to make redundancy payments while the men join the army of people working for local council direct labour departments. It is adding injury to insult that in such circumstances the small business

man will have to pay up at the worst possible time.
If we want a slogan to illustrate the effect of Government measures, it is "Kick a firm when it is down and it is more likely to go under". I fear that that will happen in many cases because of the way in which this liability will operate.
I turn to my third point. I hope that the Minister will take it on board and will be prepared to make representations to his colleagues in the Treasury. A number of business men have put it to me that they face acute problems because they do not have the cash with which to make redundancy payments. Therefore, they cannot pay off the men whom they cannot afford to carry. That leads them into a continuing decline, to the point at which they go bankrupt. As the Minister will know only too well, bankruptcies among small firms in the past year were higher than at any time during the depression. The level of bankruptcies in the past year was higher than when the Minister was a boy, when unemployment was so desperately high in the 1920s and 1930s. Indeed, bankruptcies are likely to be higher this year than at any time during the depression.
The fact is that firms are getting into further and further trouble because of this contingent liability. It is a liability against which a firm is not allowed to make a reserve. It is a liability that cannot be entered in the accounts, although it is clearly an expenditure that will have to be met at some stage. There is a strong case for the Minister saying to the Government that there should be an allowance in terms of companies providing reserves for this purpose. That could be mixed in with the way in which the Chancellor deals with the system of stock relief, which is offset against profit. I do not propose to enter into the details, only to say that representations should be made to the Treasury.
At the same time the Minister might draw to the Treasury's attention the curious position in which the close company is placed. Many small firms are close companies. They are compelled to pay out, and yet they have this contingent liability for which they should be making cash reserves.
In his opening remarks the Minister explained that claims were difficult to foresee for various reasons. He said that much depended on the age of the employee, the length of service and rates of pay. That was sleight-of-hand. He omitted the main reason that he is unable to foresee the level of demand. I refer, of course, to the growing level of unemployment under this Administration. The Minister must regret it as much as I do, but the level has doubled since the Government took office. Who knows by how much it will increase? Surely we might have some estimate. Certainly, the Secretary of State has cast some doubts. We have order, counter-order and disorder. We have had the long pause and the uncertain answer about the question of 2 million. We have had the statement in the House today. It seems that we can take our choice.
The certainty is that the Government do not know how much damage their economic policies are doing. We must warn them that they cannot take more and more money out of industry as this little measure—just another straw—is doing. By continuing in this way we are making more certain that the level of unemployment will go still higher.

8.16 p.m.

Mr. Douglas Henderson: When the Minister introduced the Bill he was somewhat diffident about it. He said that it was a simple Bill, but he was somewhat diffident about the effect it would have and the financial and economic implications. I think I am right in saying that he told us that the cost would be 1·8 per cent. of 1 p per week. I am sure that he will correct me if I am wrong. He added that that is not very much as an overall cost. Of course, but it is not the overall cost that matters. The main problem is where the cost has an impact. In fact, it has an impact exactly when redundancies occur. There is a substantial cost at the moment at which this measure applies.

Mr. Harold Walker: In order to clear up any misunderstanding that there may be about the figure I put before the House, I said that it would be 1·8p—that is one penny and eight-tenths of a penny—for every £60 of wages on which earnings contributions are paid.

Mr. Henderson: I am grateful to the Minister for clearing up that point. I should hate to exaggerate anything he said. He is very good at doing that himself. I should never try to emulate him in that respect.
The Minister said that it would be extremely difficult to forecast the economic impact of the Bill although the Explanatory and Financial Memorandum suggests that it will be approximately £18 million per annum. That reminds me of a story of averaging. When dealing with figures we have to be especially careful when referring to averages. I was once told that the average age for contracting a certain disease was 40 years. As I approached that age that sounded somewhat alarming, until I discovered that the average was made up in a peculiar way. The disease was contracted only by babies and people of 80 years and over. It seems that the Minister's figures are somewhat akin to that form of statistic.
Surely the Minister is able to give us some indication of the cost, or, as the Government would put it, the savings of different levels of unemployment based on the implementation of the Bill. Perhaps he will give us the figure for every 100,000 redundancies. Perhaps the Minister will listen for a moment. I shall pause so that he can hear what I am saying. Is the Minister not in a position to give the cost for every 50,000 people made redundant, or every 100,000 or 200,000? Surely his Department has some yardsticks by which it can make such calculations? That must be so if it can arrive at £18 million per annum. That figure must have been calculated on some basis. If it could find a basis for making that calculation, surely it could take the House into its confidence and tell it what effect the Bill will have at varying levels of unemployment.
It is clear that one of the major factors in all this is that we appear to be on a rising redundancy curve. The figures in Scotland which I have obtained from a parliamentary answer show that almost 22,000 people were made redundant in 1976. The last unemployment figures published showed that unemployment in Scotland had increased by 2,000 a week over the past three months. From other parliamentary answers it appears that the figure is likely to run at about


1,500 a week for the next three months. This is a very serious situation. Looking at the Bill, I think that we are entitled to further information about the impact of the economic costs. The Government can provide this information if they can provide the figure of £18 million in the Bill.
As the hon. Member for Basingstoke (Mr. Mitchell) said, the impact of this proposal will be felt when companies are least able to provide the cost. It will happen when people are actually made redundant. Paying for this additional slice of redundancy money could make a considerable difference in the situation.
Another matter to which the Minister may care to apply his mind is that, in many cases, trade unions can negotiate more generous redundancy terms with employers than the bare minima laid down in the Bill. This will make it more likely that employers will be less able to pay these more generous terms, which, in many cases, have been agreed.
Coming as it does on top of everything else—our general unemployment situation, with an unemployment rate of 8·4 per cent. in Scotland, the withdrawal of regional employment premium, which has taken £78 million out of Scottish industry, and the national insurance surcharge which is upon us—this figure of additional costs for redundancy payments will bear down on the situation. These are all cumulative factors. We cannot look at each of them in isolation.
I come, then, to the way in which the legislation has been introduced. When the Bill was published I tabled a Question to the Secretary of State for Employment asking him to list in the Official Report the organisations which his Department had consulted about the Bill. I was informed quite boldly by the Under-Secretary that there had been no consultation by his Department with any organisation—not with the TUC, the STUC, the CBI, nor anyone. There had been no consultation with any organisation. I tried to discover the considered views of the TUC, the STUC and the CBI. I found that very few of them were aware of the impact of the Bill or even that it was to come before this House today.
I also asked the hon. Gentleman to give an estimate of the effect of the Bill on Scottish employment, especially in the small business sector. He replied that the reduction in the rebate might possibly reduce the number of redundancies declared. I hope that we shall get some amplification of that rather illuminating statement. However, he went on to say that its financial effect on both large and small businesses generally would be relatively limited.
If it is really likely to reduce the number of redundancies declared, how can it have a financial effect on large and small businesses in terms of the rebate? Is it the Government's new plan to reduce unemployment by cutting the employer's part of the Redundancy Fund? That is what seems to be implied in the hon. Gentleman's answer. I tend to think that he was, perhaps, answering with the equivalent, on the Treasury Bench, of his tongue in his cheek. I suggest that there was certainly an amount of cheek in his reply, in any event.
Taking into account the fact that the Government's proposal will hit the cash flow of many companies, especially small companies, and that it is another blow at the morale of people in business, I have to apply the test of whether it is likely to help the employment situation in Scotland. On the basis of the Minister's explanation, the answer is a categorical "No", and I shall recommend my hon. Friends to oppose the Bill.

8.25 p.m.

Sir Anthony Meyer: Any hon. Member speaking from the Opposition Benches has to be extremely careful about criticising any Government measure purporting to cut Government expenditure. However, I think that my hon. Friend the Member for Brentford and Isleworth (Mr. Hayhoe) demolished that argument thoroughly. But just in case it is levelled as an accusation against the Opposition that in opposing this measure they are contradicting their oft-repeated call for cuts in Government expenditure, let me make it plain that if I am challenged and asked "If you will not accept this cut, what are you prepared to accept instead?", my reply will be that in preference to this kind of selective cut I should much prefer to see VAT increased to 10 per cent.
In any event, I choose to distinguish between two different kinds of purported cuts in Government expenditure. There are those cuts which operate a genuine reduction in the level of demand. There are those other purely bogus cuts which do not operate any reduction in the level of overall demand but merely transfer the burden of one section of the community to another in such a way as neither to reduce the overall level of demand nor to increase the nation's productive capacity.
The Bill is a paramount example of a transfer which does not cut the level of demand, which does something to reduce the nation's productive capacity and which contributes not one whit to the reduction of the level of inflation. Therefore, it seems to me a peculiarly inappropriate Bill to bring forward at present.
The Bill is peculiarly inappropriate because it adds to employers' costs at a time when everything else seems to be conspiring to add to those costs and at a time above all when the Government are bringing in their payroll tax, which must surely be their most ludicrous contribution to increasing the total level of unemployment.
At a slightly lower level, perhaps, the measure is objectionable because it is unpredictable and arbitrary. It is an accepted fact on both sides of the House that it is most desirable that Government policy towards industry should have a measure of continuity, should be predictable and should be gradual in its transition. It is better to have bad policies which are consistent and predictable than to have violent alterations between good and bad policies.
No party has been more clamorous than the Labour Party in its demands for continuity. I well remember the violent criticisms directed at the Government constituted by my party when we went over from the system of investment grants to that of investment allowances. The whole burden of the complaint of Labour Members was that it was an arbitrary and sudden change in policy which could only have an upsetting effect on industry. Such criticism lies more than ever against this measure.
The Bill will make its own contribution towards increasing unemployment.

I was glad to hear my hon. Friend the Member for Brentford and Isleworth ask for an inquiry into the effect of the Redundancy Payments Act on employment prospects generally. It is not as easy to be certain about the effect of the operation of the Act as it is to be certain about the effect of rent control and security of tenure legislation on the sensational increase in homelessness in the last decade.
There is a very much more respectable argument in favour of a redundancy payments situation particularly in times of full or over-full employment, when it is a valuable means of increasing labour mobility. At the moment, however, it is very difficult to argue against the proposition that the existence of redundancy payments has contributed to the increase in the total level of joblessness, because the number of jobs saved by such payments is vastly outweighed by the number of job opportunities lost.
I am desperately worried about unemployment in my constituency. In certain parts of my area unemployment has now reached the scarifying level of 20 per cent., and each days brings well publicised news of fresh redundancies. There is also the much less well publicised news of the loss of job opportunities, and talk about natural wastage conceals the fact that job opportunities for school leavers are drifting away day by day. This trend will not be reversed until the Government and the trade unions give real priority to curing unemployment and creating new jobs.
The legislation already on the statute book has been extraordinarily ineffective in achieving that aim. Despite the Employment Protection Act and the Redundancy Payments Act, we still get redundancies at Courtaulds, threatened closures at Shotton and a massive loss of employment at Hawker Aviation, the three major employers in my constituency.
This measure, piddling though it is, casts still further doubt on the Government's sincerity when they say that their overriding priority is industrial regeneration and the need for investment in industry. In its small, ignoble way, the Bill will make a contribution to the rising level of unemployment because it will increase the number of bankruptcies, causing more redundancies and cutting the


already dismally small number of job vacancies. Without hesitation, I shall vote against it tonight.

8.32 p.m.

Mr. John Page: I hesitated to rise initially because I was hoping to get some statistics from the Library to enlighten my speech with new information, but in the words of Sir Spencer Summers, who, I think, once said in Committee on a Bill concerning employment,
I am advised, at least I have not been advised, but if I had been I am sure that this is what I would have been advised—
[Interruption.]

Mr. Deputy Speaker (Sir Myer Galpern): Order. Perhaps we should follow the custom of television and have a "commercial" in between until the hon. Member gets his relevant information.

Mr. Page: That is a very good idea, Mr. Deputy Speaker, and it would certainly have an enlivening effect on our debates. Also, it might make the economy of the House of Commons rather better than it is.
I had hoped that the Minister of State would be here for me to remind him of the number of occasions when he and I have taken part on debates on redundancy payments. He is, of course, the longest-serving Minister that the Department of Labour, Department of Employment and Productivity and Department of Employment has had for a long time. His service at St. James's Square is almost as long as the life of the trees in the middle of that square. It is a great compliment to the House that he is so knowledgable, but it must be acutely embarrassing to him to watch the rolling inconsistencies of Government policy over the years.
The saddest part of the Minister of State's speech was when he said that the Bill was part of the efforts of the Chancellor of the Exchequer in seeking to upgrade the recovery of the economy. I suppose that it is part of what is known as the industrial strategy. Frankly, I do not understand what "industrial strategy" means, except that I believe that thosuands of people are engaged in working out statistics and making new plans and policies. One likes to think of

industrial strategy as the Chancellor of the Exchequer, like some great field marshal in headquarters operations room, discussing with his commanders new moves which should take place. That, of course, is the situation that he often portrays to the House. His forecasts include such things as unemployment down to 3 per cent. in 1979, as we heard earlier. But when the other generals leave he rushes to the telephone, asks to be put in touch with the commanding officer of B Company and shouts "Attack at once", so that the strategy tends to go by the board.
How can the Bill seek to upgrade the recovery of the economy when it is yet another impost on productive industry? This is a further form of taxation on industry. As far as one can see, it does not fall on the Government or the Department of Employment.
Although there will be a reduction of £18 million in the amount paid out by the Department for the fund, the Explanatory and Financial Memorandum states:
No changes in public service manpower are expected to result from this Bill.
It seems curious that a saving in expenditure of £18 million cannot result in the saving of even one Government job in the process. That is less difficult to comprehend when one realises that it is not a saving in Government expenditure. It is simply that levies paid in by industry will remain in the fund for a little longer. It is not Government money, because no one has ever suggested that contributions to the Redundancy Fund are taxation. It is supposed to be a self-balancing fund, and, therefore, it is double-talk to suggest that the Bill is providing a saving in Government expenditure.
This again leads us to the reasons for the Bill. My hon. Friend the Member for Brentford and Isleworth (Mr. Hayhoe) and my hon. Friend the Member for Basingstoke (Mr. Mitchell), that proud and successful defender of the small business man, pointed out that the only reason must be that new and greater calls will be expected to be made on the fund.
The Secretary of State made an embarrassed broadcast which I heard while I was driving up to the House of Commons today. In it he refused to say that he did not predict 2 million unemployed, but he


refused to say the opposite. He simply said that the figure had been mentioned. and he passed by on the other side.
This must be one of the few examples —almost the only example—of sensible forward provision by the Government. They have realised that over the next year or so unemployment will increase disastrously and unnecessarily, and as it increases their demands on the fund will increase correspondingly. Therefore, in order not to increase the percentage of the levy, the Government are reducing the amount to leave a slightly larger quantity in the kitty which can be drawn upon when these further redundancies take place.
If this small Bill is reported in the Press, the news will be yet another log thrown on to the fires of exhaustion and frustration of management. It is all very well for the hon. Member for Sowerby (Mr. Madden) to laugh. I apologise for my method of speaking, but I do not apologise for the sentiment. The point that I seriously advocate is that there is a great sense of frustration in middle management, which is constantly exhorted by the Government to do better. It is told by the Chancellor, by the Prime Minister and by all Ministers at one time or another that management will be supported by the Government in helping the economy to recover, yet all that hapdens is that management is given no new incentives. Differentials in management wage scales are constantly being compressed. Managements' efforts to manage its businesses are continually interrupted by Bills such as this.
If the Government are asking for a year for Britain, they should first get rid of the Chancellor of the Exchequer. Then they get rid of many of their policies and try to support those in private industry who are really making an effort to achieve more productivity and to earn money for the country.

8.42 p.m.

Mr. Nicholas Scott: The Bill has been called ignoble, mean, small and little. Apart from the Minister, not a single Labour Member has risen to advocate the Bill. The hon. Member for Thornaby (Mr. Wrigglesworth) made a brave effort, but he said that he would go into the Lobby reluctantly. I am astonished that the Treasury Bench has

been unable to persuade a single one of the distinguished occupants of the Labour Benches to advocate the Bill with the same strength as the Minister.
The principal reason for supporting the Bill given by the hon. Member for Thornaby was that it flowed from the Government's economic strategy. I suppose that is as good a reason as any, but, having watched the Government's economic strategy in operation over the last two and a half years, I should have thought that that would be a reason for not supporting the Bill rather than for supporting it. The fact that we have to have the Bill is, in part, a measure of the failure of the Government's economic strategy.
It is right that the people of this country who are presently unemployed should be reminded that their fate was settled during the early days of the Labour Government. On that party's return to office in March 1974 it abandoned the restraints on public expenditure that had been introduced by the previous Tory Government, and all attempts at wage restraint. We wasted 14 months in a total free-for-all while the fate of those who are presently unemployed was sealed by the abdication of responsibility by those who were then, and are now, responsible for our economic affairs.
I appreciate the difficulties faced by the Secretary of State for Employment in forecasting the future level of unemployment and in forecasting how the figures are likely to move in the medium term, but I wish that the Minister would be rather more forthcoming. Some commentators claim to have perceived an unemployment pattern that is a new phenomenon, to have seen a new pattern emerging. They say that much of the unemployment which has been created in the past two and a half years may not go away when the economy begins to expand; that there is an underlying structural element that may mean that young people and those with few skills will find themselves unemployed for very much longer than has been the case in the past; and that the pool of unemployment may not be mopped up as it has been in previous expansion periods of the economy.
This has relevance to the provision that we make for unemployment, redundancy


and retraining. We should not look at the redundancy payments scheme in isolation from the general provision for those who are unemployed.
My hon. Friend the Member for Harrow, West (Mr. Page) said that the Minister of State was the longest-serving Minister at the Department of Employment. I must be the shortest-serving Minister, having been appointed in January 1974 and finding that events quickly caught up with me and took me not only out of the Department, but out of the House. Despite my great admiration for the Minister of State I was disappointed when he slipped into his speech a reference to employers getting the benefit of redundancy rebates. This is not just a semantic argument; this sort of thing happens far too often. The whole concept of the redundancy payments scheme was that payments to people who became redundant would be made by a partnership of employers and the Government. If the Government are now turning this round and saying that the rebate is a benefit, they are indulging in the same sort of double talk that they use when equating mortgage interest relief with housing subsidies in the public sector.
The Bill is yet another burden on industry. It may be a small burden, but it is another straw closer to the breaking of the camel's back, and it comes at a time when companies are least able to afford the extra burden of redundancy payments. I once worked for a company which had to declare a number of people redundant, and the cost of financing the operation was a tremendous worry to those who were responsible for the orderly management of the company's affairs. The Bill can only make such a situation worse.
I support the argument of my hon. Friend the Member for Brentford and Isleworth (Mr. Hayhoe) that it is time for a full-scale review of the workings of the redundancy payments scheme, although, since that criticism was being made from these Benches before 1970, it is a pity that there was not such a review during the period of the last Conservative Government. We know that there are abuses of the scheme; many may be against the spirit rather than the letter, but everyone in industry knows about them.
My main complaint, however, is that the scheme is an extremely blunt instrument for carrying out the task that it it supposed to do. The way in which payments are calculated takes no account of the social and human cost to the people being made redundant. The scheme does not pretend to be an efficient mobility allowance. It is an extremely crude instrument. While the hon. Member for Thornaby claimed to support the Bill he drew attention to the increases in administrative expenses and collection costs and to the deficiencies in the investment policy of the fund.
These matters should be examined together in a full-scale review of the scheme. At present, there are a variety of measures designed to help those who lose their jobs—for example, flat-rate unemployment benefit, earnings-related benefit, mobility allowance, retraining allowance, and redundancy payments. Since unemployment has doubled under this Government—and we hear noises that it will go still higher—surely the time is ripe to review the whole package of provisions for those who lose their jobs, and to see that they are as sophisticated and as finely tuned as possible.

8.51 p.m.

Mr. Fred Silvester: We do not suggest that the Bill creates a new redundancy situation; but it provides the opportunity to examine the problem of redundancy and to see whether the Bill moves in the right direction. I conclude that it does not move in the right direction, for a number of reasons.
The large sums of money which are now devoted to redundancy payments compare in size to those which are devoted to other forms of industrial support. We debated the North-West Region a few days ago. North-West hon. Members know that there is a crying need for all types of assistance in that area, through either the private or public mechanism, to stimulate declining industries, particularly on Merseyside. All parties have been involved in providing substantial sums of money for industry. The method has varied from pumping the money into industry, to easing the pain of redundancy through the redundancy payment scheme. When that scheme started 70 per cent. of the money was provided by the State and 30 per cent. by


the employer. The State's contribution dropped to 50 per cent. and today it is down to 40 per cent.
The effect of that is to take away some of the original purpose of the scheme. The original scheme was intended to provide a type of insurance scheme for people faced with redundancy. Payments were made even if the companies concerned could not afford them. It seems right that the employer should pay a fair share, but the scheme should not be considered to be a form of taxation upon the employer. It was intended to be a partnership between the Government and the employer. However, the burden of the partnership is swinging more towards the employer.
We must consider whether that continuous trend is having a bad effect upon the employment situation. The Department of Employment undertook a study in 1975. It involved a sample of 10 per cent. of those who were benefiting from redundancy payments. It was a matter of some interest to me that the weight of those payments was going to the South-East. That strikes me as an odd conclusion to reach if one is concerned with the effect of these payments upon people suffering unemployment. It is not the sort of area to which one would expect to find the weight going. Also, one then says to oneself that these sums of money—I am not sure of the current figure, but it has been running at £200 million a year or more—are very large indeed for assisting unemployed people.
On Thursday we were discussing all sorts of other schemes which would involve lesser sums, and we were scrabbling around to find the money with which we might do other jobs. We were proposing another scheme on the lines of the job release scheme. We are all the time looking for ways of finding money to alleviate the situation of people faced with the dramatic event of unemployment suddenly coming into their lives. Therefore, it is reasonable to ask whether this is the right way for us to do it, or whether we should have a thorough look at the whole scheme.
My hon. Friend the Member for Basingstoke (Mr. Mitchell) always makes the plea for small businesses, and quite rightly, too, but there is an aspect of the whole matter of the burden upon

small businesses and on companies in respect of redundancy payments that we should recognise. The Employment Protection Act, in addition to the payment, provides for prior notification of redundancies on a larger scale than was done previously. It also provides for time off to find work, and so on. All those things are admirable, and I am not saying that they are not the way in which we should be moving. However, if one adds them all together, one finds that more and more burdens are being placed upon the company that seeks to take on additional labour. I emphasise that it is not a question of saying that all these things are undesirable and that we should return to the dark ages. What we have to ask ourselves is whether these additional burdens, these hesitations at present, are having a bad effect on employment prospects.
I do not think that it is an accident that the problems of youth employment are particularly acute. If one looks at youth data over the last two years and compares the number of school leavers out of work in January with, say, the number out of work in the preceding August, one finds that for years past the number unemployed used to be between 10 per cent. and 15 per cent., but it is now runinng at 25 per cent. or more. That is not something—although I am subject to correction if someone has done a detailed study—that has happened in previous recessions.
Therefore, we must ask ourselves whether on this occasion something different has happened from what has happened in previous recessions in regard to the unemployment of young people. We can all put forward different things that we thing may have happened, but one thing that I suggest is a high probability is that it is easier to keep on people whom one might otherwise suggest be moved off to a different job, particularly if they have been in a company for some years and, therefore, the redundancy payments would be higher, than it is to take on young people, particularly as every time one takes on a young person nowadays one is taking on more and more obligations.
I say that not because I do not think that that is a way that the employment policies of this country will develop or


should develop; there is very much to be said for that; but it is important in the interests of those people seeking a job, who have also to be considered, as well as those people who are trying to hold on to a job or are in a job, that we consider whether these policies are having a negative effect. I should have thought that at least a prima facie case had been made that these burdens are having a bad effect, particularly on smaller businesses, and that we should take a closer look at them.
I do not think that this Bill will have an earth-shattering effect. It is just another small contribution to the gradually deteriorating situation. Therefore, it would be right for this House to take stock of the way in which redundancy is operating and to say to ourselves "Well, this time we shall say 'No'—till we have had a good and thorough look at the whole operation".

9.0 p.m.

Mr. J. Enoch Powell: I apologise for participating in the debate after being prevented by service on one of the Committees of the House from being present for the opening speeches, although I am not sure that anything was said in the opening speeches which was relevant to the single point I shall make.
I notice that there is not present at the moment on the Treasury Bench a representative of the Northern Ireland Office. I suspect that that may have been the case throughout the debate. Measured by lines, however, more of the Bill is concerned with Northern Ireland than with the rest of the United Kingdom.
You often have been present, Mr. Deputy Speaker, in the late hours of the night or the small hours of the morning when the House has considered Orders in Council under the Northern Ireland Act 1974 which apply the legislation of the United Kingdom to Northern Ireland. It will be recalled that frequently on those occasions my colleagues and I have complained about that procedure. We have argued that there is no possible reason why the House should not legislate at one and the same time for all parts of the Kingdom instead of the legislation for Great Britain having to be clumsily dittoed in the form of an Order

in Council for Northern Ireland under the 1974 Act. It is my delight to observe that that is exactly what is being done in this Bill. Although it requires more words to do it for Northern Ireland than for Great Britain, the Government have apparently found no difficulty whatsoever in including Northern Ireland and the appropriate application to Northern Ireland in a United Kingdom Bill.
When my hon. Friends and I have made that objection, Ministers have sung a repeated song. They have said "Yes, it is perfectly true that we could have included the content of this Order in Council in a United Kingdom Bill, but it is our anxiety to maintain the statute book of Northern Ireland intact, complete and inviolate so that if and when devolution returns again to Northern Ireland we can simply hand over the statute book and they can go on from there". Well, the enthusiasm for a Northern Ireland statute book seems at any rate not to have got as far as redundancy payments.
The whole argument is a nonsense and a prevarication. Although the Northern Ireland Parliament, which passed the 1965 Act, which Clause 2 of this Bill amends, had extensive powers of taxation and had powers to legislate quite differently, if at all, from this House, on the subject, for instance, of redundancy, it barely used those powers during the 50 years of its existence.
If hon. Members will compare the introduction to Clause 1 with the introduction to Clause 2 and in particular the words in brackets, which describe the effect of the respective parts of Great Britain and Northern Ireland legislation which is being amended, they will find that they are as like as two peas in the same pod. In the same year—1965—in which this House introduced for Great Britain the provisions of the Redundancy Payments Act, the Parliament of Northern Ireland did exactly ditto by an Act of Parliament of Northern Ireland.
In this Bill, the House and the Government are behaving in an entirely sensible way, a way which is consistent with good legislation. They are using the same Bill in order to amend, uniformly, law which is already uniform in all parts of the United Kingdom. By doing that, they are enabling hon. Members from


all parts of the kingdom, if they like, to avail themselves of the opportunity to participate in all stages of legislation, whereas, in the procedure of which I am complaining, Northern Ireland Members are expected to apply themselves to legislation in the form of an Order in Council when that legislation, in proper legislative form, has already gone through all its stages in both Houses.
I therefore want to thank the Government for having legislated in what my colleagues and I regard as the proper way for Northern Ireland in this respect. Irrespective of the merits of what they are doing, they have done it in a proper way. I wish to place upon record the fact that this shows that there is no substance in the continued arguments in favour of legislation late at night by Order in Council on matters in which the law in Northern Ireland is intended to be brought into or kept in perfect unison, as it should be, with the law in the rest of the United Kingdom.
This House has been concerned for many days in the recent past with the question of legislative devolution to other parts of the kingdom—to Scotland and Wales. Of course, I have no intention of trespassing upon that already well-trodden ground. I simply draw attention, on the basis of Clauses 1 and 2 of this Bill, to the fact that Northern Ireland in that whole debate is, in the words of my hon. Friend the Member for Antrim, South (Mr. Molyneaux), the exception that proves the rule and that legislative powers of an extensive character were conferred upon the Parliament of Northern Ireland but that the Parliament of Northern Ireland did not use those powers to give itself different law from the rest of the United Kingdom, because it understood perfectly well that the effect of using those powers would be that it would gradually grow away from the rest of the United Kingdom, which was the one result that it was determined to prevent.
The converse is, of course, that if we confer those powers upon parts of the kingdom which, on the Government's own admission, are to be regarded as nations we cannot expect the same result. On the contrary, we must expect the law in those parts of the kingdom will become rapidly and increasingly diverse from the law of the rest of the country so that,

whether we like it or not, a move towards separate status is implicit in that legislation.
I recognise, Mr. Deputy Speaker, that I must already be trying your patience and I desist from that line of argument, patent though the facts are upon the face of this Bill.
I end by expressing the hope that in the future the Government, when amending the law in both parts of the kingdom—Great Britain and Northern Ireland—will, wherever possible and much more often than in the past, use the method adopted in this Bill and not the procedure by way of Order in Council to which not only my hon. Friends and I but those whom we represent so strongly object.

9.8 p.m.

Mr. Ronald Brown: I am concerned about the way in which the 1965 Act is being implemented. Some Opposition Members have been nit-picking over this issue. I am greatly worried about the ease with which some employers turn to the Redundancy Payments Act to ease their problems.
The intention behind the 1965 Act was that where, through a change in technology or other overriding conditions within an industry, a man's job came to an end through no fault of his own, he should be recompensed financially for the loyalty he had shown to the firm over, perhaps, many years and for the fact that he had fallen on hard times until he could find another job. The object was to give him time to use his skill or to obtain fresh skills to enable him to obtain other work. Therefore, instead of driving him out of his job, it was an attempt to help him.
That scheme operated fairly well for a number of years, but from my knowledge of the furniture industry I find that employers are using this as a first resort. I recently learned of and informed the Minister, about a frightening example of a firm in the furniture industry which decided to anticipate the Chancellor's Budget in December. The employer thought it was possible—according to what he had read in the Financial Times and from other financial pundits—that VAT on the goods that his company was producing would be


increased from 10 per cent. to 25 per cent. He judged that if this happened his business would be in financial trouble, so he decided to have a pre-emptive strike by issuing 90-day notices to his employees before the Budget. He anticipated that, if VAT went up in that way, he would already be half-way down the field and would not have to start the 90-day period from the date of the Budget.
That does not sound too bad until we remember that the employer was playing with men's lives and that it happened just before Christmas. It was a grossly unreasonable use of a mechanism which was designed for a different purpose. When I remonstrated with the employer, he said "We are free to do what we like. In any event, we share it with the Government. So what?"
I am not sure that reducing the proportion which an employer may claim will be a solution. Employers should not use this mechanism too quickly. I am not prepared to argue that it is the wrong principle to raise the proportion which must be paid by employers as against the proportion that the Government are paying, but I do not believe that the problems of people who have been put out of work have been properly understood.
I have a list of payments made to a number of people who have been declared redundant. It is interesting to compare these payments with those which furniture workers receive when they are declared redundant. Dr. Weiser, of Bunzl Pulp and Paper, was made redundant and got £129,000; Mr. Dowson, of the Rank Organisation, received £150,000; and Mr. Walsh, of Bexhill Urban District Council, did not do badly with ratepayers' money, because he got a little nest egg of £80,000.

Mr. Hayhoe: What about the tax?

Mr. Brown: In the hon. Gentleman's absence, one of his hon. Friends said that we should not mix up this problem with questions of mortgage repayments, rents, and the like, but now the hon. Member for Brentford and Isleworth (Mr. Hayhoe) is mixing up the problem with taxation.
Returning to the large redundancy payments that have been made to some

people, it seems that in these circumstances it helps employers of that order to give that sort of help to selected members of their staff. Yet these employers are complaining to Opposition Members that their businesses will go into the ground, if they are forced to pay an extra percentage in redundancy payments.
I support the Bill, but I hope that there will be an inquiry into the operation of redundancy payments and the latest trend in these payments. There are powerful reasons for such an examination not only in the furniture industry but in other industries. For example, one thing that I find in my constituency is that banks are foreclosing rather sharply on firms. Firms appear prima facie to be satisfactory. They have good orders on their books, the personnel employed in an enterprise are working quite happily and with a will, and the firm is apparently making a profit. One Friday morning the men arrive at work at 7.30 and work happily all day until 4.30, when someone walks into the factory and says "I have been put in by the bank as a receiver. I am going to give you your P60s, and you do not have to come back again."
That is the first indication the men receive that something is wrong, yet it means that they have lost their jobs, and from that moment there is continuing discussion about whether their redundancy payment will be available or whether the Government will have to pay it all out of the fund and recoup the money from the employer. There is a great deal of to-ing and fro-ing, and nobody knows what is what. The employer says "I cannot tell you what is happening", and one goes to the bank and is told "Do not talk to us. You will have to talk to our chaps on the floor. It is the regional men who know all about these things."
This is a means of interfering in industry which ought to be investigated. Is it reasonable that, suddenly and without notice, workers should find themselves out of a job when a few days ago they were employed in an industry that was apparently thriving?

Mr. John Page: Does the hon. Gentleman think that a firm is continuing to trade apparently up to the last moment that it can legally do so under the solvency rules because, first, it wishes to keep its employees going and, secondly, because


it is too afraid to create redundancies because of the additional cost of cash flow that that will immediately introduce? That is a possibility.

Mr. Brown: Yes. That is why I am asking for an inquiry. One needs to consider some of these aspects. We have had a fair amount of experience of the working of the Act. Twelve years is a long time.
The Government having brought in the Bill, it is not too soon for them to readjust the arrangement between themselves and employers. The Minister should investigate the broad issues to see whether, after 12 years, we need other information or other forms of help for the employer or the employee to ensure that an enterprise can be kept in business rather than be put out of business merely to provide redundancy pay.

9.19 p.m.

Mr. Tony Newton: I must first apologise for not having been present earlier for a substantial part of the debate. It follows that I shall not attempt to go in any detail into the precise provisions of the Bill because I have no doubt that my right hon. and hon. Friends have made a number of comments about the specific provisions of this measure. I should like to take this opportunity to say something about the broader issues raised by the Bill and other aspects of Government policy that relates to this measure.
I have some sympathy with some of the remarks of the hon. Member for Hackney, South and Shoreditch (Mr. Brown), and in particular his suggestion that there is a need for a proper inquiry into the whole working of the redundancy payment scheme. However, it seems to me that the hon. Gentleman undermines his case in that, whereas he criticises the way in which some firms behave, and some aspects of what happens when some firms are driven out of business, he has given the House a graphic description of the chronic difficulties facing British firms, and especially smaller firms, in the economic circumstances that have been created by Government policies over the past few years.
A large number of firms, especially small firms, are desperately trying to keep themselves afloat in the interests of

their workers. Simply to preserve confidence they are anxious to disguise their difficulties till the last minute. We are talking about a situation that exists throughout British industry and the economy generally, and that has given rise to these problems. No doubt it would be out of order for me to go that wide into the Government's industrial and economic policies. However, this Bill and its proposals cannot be divorced from the wider issues which have come up time and again in the past few years.
This Bill and other proposals that we have seen recently are very much part of last year's public expenditure cuts. Along with the national insurance surcharge and the Social Security (Miscellaneous Provisions) Bill, this measure is one of the ways in which the Government, after profligate public spending, are trying to claw back a little here and there by whatever means come to hand. How much is saving of public expenditure in a form which simply passes the burden on to private industry? We have seen this happen throughout, with the public expenditure cuts. They are presented as public expenditure cuts and will appear as such in the national accounts, but the burden falls upon private industry and the jobs there. Although it is a small part of that story this Bill is nevertheless an important item in it. It has to be seen together with the other parts and, above all, with the national insurance surcharge—that £1,000 million which is being clawed back mainly out of private industry.
If Ministers start saying how terrible it is that unemployment should be so high, if they say that something must be done, and try to pretend that it is not the result of Government policy but rather is something that has emerged as a result of world trading conditions or whatever, they are not entitled to a hearing. Of course conditions are difficult. What Ministers have to do is explain why so many of their policies—including the proposals in this Bill—might almost have been calculated to add to our difficulties and increase unemployment. We have seen this repeatedly since the Government came into office.
One of the major problems currently facing firms, and much more important than the proposals we are dealing with here, is the chronic uncertainty about


the future of stock relief. Why do we have this uncertainty? It is due to the way the Government have tried to wriggle their way out of the damage they did earlier to British industry by increases in corporation tax payments. They wriggled out of this in a backdoor way. Now industry is faced with this uncertainty. That is the classic case which illustrates the manner in which the Government have mishandled industry in the past few years.
Whenever one talks to small-business men, or farmers, one finds the point being made about the effect that capital transfer tax has had on the ability to run the business, to find capital and motivate those involved to build up the business. There is also the problem of what ought to be described as the infamous national insurance surcharge, which is nothing whatever to do with national insurance. It is simply a convenient device for levying a huge payroll tax on British industry; it will increase unemployment and throw greater burdens on to the private sector.
I come to the specific question of unemployment and the effects of the Government's legislation. I have no doubt that Ministers are only just beginning to realise, if they have yet begun to do so, how much their legislation has done to damage employment over the past two years. I am sometimes tempted to think that the main armament of the Government in political debate is the boomerang. They have flung their rent legislation out and now it is returning to hit them and they must do something about it. They have flung out their tax legislation and that, too, is returning to hit them by way of its effects on industry. Above all, they have flung out their employment protection legislation, which is now rebounding upon them and all the people who want jobs.
I do not know whether Ministers are yet ready to acknowledge this, but if, as I hope, they are at all in contact with the people who run firms, perhaps especially the smaller firms, they must know that this kind of legislation, the national insurance surcharge and the Employment Protection Act, are militating against increased employment. No employer will take on an additional man if he can avoid it. That is why we have growing figures of overtime at the same

time as we have very high levels of unemployment. Any employer who takes on an additional man is taking on the burden imposed by the Bill and a whole range of other commitments which will be costs on his business, costs he cannot escape. He fears that the Government will add to them, and the logical conclusion to which he comes, when the economic position is so uncertain and he never knows what the Government will hit him with next, is that it is not worth the trouble of taking on an extra man, that it is too big a risk. Instead, he gives out more overtime. That is fine for those with jobs—just as the security of tenure legislation was fine for those with furnished accommodation; but it makes it much more difficult for people to obtain jobs, or furnished fiats or rooms.
So much of the Government's legislation has not only failed to achieve its objectives but has, after all the warnings, done exactly the opposite. Now the words are being eaten in housing. They have been eaten over public expenditure, and they will be eaten in the Budget on taxation. It is high time a few Department of Employment Ministers ate a few words. Till they do we shall not begin to tackle the problem of the worst unemployment this country has had for more than a generation. I hope that the Chancellor of the Exchequer will succeed in his Budget in doing enough to reduce taxation to help to deal with at least one of the problems underlying the Bill, though I doubt it. Somebody will have to do it before industry can recover.
The real lesson of the Bill and all the policies that go with it is that Ministers must not only keep talking about their so-called industrial strategy and the need to encourage private industry but must face up to what it means in terms of their policies. I am sick and tired, just as all business men and farmers to whom I talk are, of hearing from the Government how important it is that British industry should invest, that we should expand food production, that we should counter imports and provide more jobs. They are being lectured year in and year out. Then they find that taxation is increased and they have less money for investment. More and more burdens, administrative and other burdens are heaped on them, making it more difficult for them to run


their businesses. Increased administrative overheads divert effort and attention. When firms are successful the Government think of new ways of penalising them.
It is possible to exaggerate this, and it may be that many people in British industry do exaggerate it, but that is the mood, We are a long way from the Government's securing the confidence of those in British industry that they must have if we are to achieve the Government's objectives. Till business men, looking at Ministers whose activities affect them say "There are men who understand our problems; even if they cannot solve them all and cannot do everything we should like, at least they will stop hitting us over the head and show signs that they want us to do a good job", we shall not have the industrial recovery that Ministers want.

9.29 p.m.

Mr. David Madel: We have had a very useful debate. The theme throughout the speeches from the Opposition Benches and the two speeches from the Labour Benches is that the Government should take the Bill away and have widespread consultation with industry, with management and unions, and let us know their conclusions. It is a pity that not more hon. Members opposite were not here to listen to the speeches, not only by my hon. Friends but by two of their own colleagues who echoed our plea for further consultation before proceeding with the Bill.
The debate takes place against a difficult economic background of rising unemployment—including the new phenomenon of structural unemployment, which particularly applies to young people with few if any qualifications—and with fear of a new bout of increased inflation following phase 2 of the incomes policy. Added to that, employers are naturally worried about the 2 per cent. surcharge to be put on them in April, and they have suffered high interest rates in the past 10 months and the continued Price Code. There is also the possibility of sharp increases in commodity prices if, as seems likely, there is a pick up in the United States economy.
The Government constantly say that they want manufacturing industry and exports to expand. We must, therefore, ask ourselves whether the Bill will help industry and firms both big and small.

The real worry for the Government is that employers will not be able to maintain their present labour forces, and will add to the unemployment if they have to make people redundant.
Equally, as the many training schemes get under way—and they have a long way to go—the Government hope for an increase in take-up by people who will benefit from them. Therefore, the Government have to strike a balance. If they increase and improve the training schemes, that ought to make it less risky for employers to make people redundant, and make employers less anxious of making them redundant, because then, it is hoped, they will go on to retraining. On the other hand, if there is a slow take-up in the training schemes and the Government persist with this sort of measure, the danger is that employers will have on their books too many people whom they cannot economically sustain, and that the training schemes will not be taken up, so that the whole aim of having a retrained labour force to take advantage of expansion when it comes will be nullified.
The employers' position does not get enough attention from this House. It is a pity that not more hon. Members opposite were here to speak about it. Employers have been making their position known throughout the country. That position has fluctuated wildly with the changes in taxation which have taken place. The Government talk about getting the employers' co-operation and bringing unemployment down by expansion and taking advantage of an increase in world trade. But then they produce this Bill. In such circumstances, we have to ask ourselves whether the Government are serious in their efforts.
My hon. Friend the Member for Basingstoke (Mr. Mitchell) asked a precise point about contingency reserves in balance sheets and burdens which small businesses have to bear in relation to the Redundancy Fund. That question has been asked by small businesses through the country, and I hope that the Minister can give my hon. Friend a detailed answer.
The anxiety of employers over the Bill has been heightened by the figures they have seen over the past two years. For instance, in 1975, over £178 million was


received by 340,215 employees in redundancy payments. From 1st January 1976 to 30th November 1976 the number of employees who received redundancy payments was 295,284. One is missing out from those figures the month of December, but when they examine the position of the average payments employers are naturally anxious about what will happen under the Bill.

Mr. John Page: Would my hon. Friend be surprised to learn—perhaps he would be absolutely staggered—that if we add the quarterly unemployment increases over the past two years we reach a total of 653,000 and if we add the number of payments made over the same period the total is 647,000—namely, a 1 per cent. difference between payments made and increases in unemployment? I do not know what it means, but I am sure that it is important.

Mr. Madel: My hon. Friend has made a helpful intervention. It underlines the number of people who have become unemployed in the past months and employers' worries about the cost that they have to maintain under the Redundancy Payments Act 1965.

Mr. David Mitchell: If the comment made by my hon. Friend the Member for Harrow, West (Mr. Page) is correct, does it not suggest that the Government are expecting a substantial increase in unemployment, an increase far above the figure that they have admitted in public as likely to take place within the next few months?

Mr. Madel: I am certain that the Government are worried that such an increase is likely. I hope that the Minister—I shall give him plenty of time to reply—will be able to say something more about the likely increase in unemployment.
The Government will recall that the amount of pay taken into consideration for computing payments under the Redundancy Payments Act was increased from £40 to £80 in 1974. That was one of the factors that caused weekly expenditure to rise from about £500,000 in mid-1974 to over £2 million in mid-1975. Therefore, employers are wondering whether the figure for which the computation

is used is likely to be increased again.
We have been debating the whole future of redundancy payments. We have been asking whether there should be a thorough inquiry into the system now that it has been working for over 10 years. I ask the Government to share their thinking with us on redundancy provision. Do they feel that the Act has led to reduced collective resistance to changes entailing redundancy? Is there any evidence to suggest that lump sum payments have helped employees to find better jobs by enabling them to look around at leisure and to make a considered choice when selecting a new job? Is there any evidence that the payments have led to unnecessarily prolonged periods of unemployment? The payments are no more nor less than financial compensation for loss of job, which is only tenuously and indirectly linked to the cost of redundancy. The Government should give us their views on that score. Do the Government think that an increase in weekly benefits for unemployment would be a more equitable form of financial compensation for loss of job and more likely to contribute to more relaxed and rational job seeking?
Now that the Act has been working for 10 years, and given the experience that exists in other countries, and the different ways in which they handle these matters, it is surely time that the Government consider in depth the questions that I have raised. What can the Government do to assist job mobility? Should they not consider the constraints, the difficulties and the obstacles which are faced by those who seek to move around? Are the Government satisfied with the co-operation between local housing authorities? I suggest that that co-operation is nothing like good enough. Even the GLC, which has been merrily overspilling into Bedfordshire and Hertfordshire for 20 years, cannot claim that the necessary contact and consultation exists between the housing authorities in our areas when people are considering transferring jobs.
The Government have announced a review of the Rent Acts. That is welcome. Surely they must admit that private sector rented accommodation has an important part to play when people are moving around the country and


changing their jobs. Are the Government satisfied that there is sufficient knowledge about removal costs and grants which can be given to people when making a change of job?
Are the Government satisfied that the time off that is allowed to look for work under the Employment Protection Act has been widely enough publicised? Unless it is, that part of the Act will come to nothing.
What, therefore, are we calling for from the Opposition Benches? First, we want the Government to have more consultation with employers. The hon. Member for Aberdeenshire, East (Mr. Henderson) elicited from a parliamentary answer that the Government had no consultations with industry before bringing forward this measure. We would like the Government to consult the Association of County Councils, for example, My hon. Friend the Member for Brentford and Isleworth (Mr. Hayhoe) referred to the document sent round by this organisation. The Government must pay attention to the fact that the non-metropolitan counties this year face an alteration in the rate support grant which is bound to make it very difficult, if not impossible, for them to sustain present staff levels.
Applications for temporary employment subsidy will be accepted up to and including 30th April 1977. What happens after that? The effect of the subsidy on employment is bound to be reflected in any redundancy payments legislation.
Are the Government satisfied that there is sufficient co-operation between the Department of Education and Science, the Department of Employment and the Manpower Services Commission? I suggest that there is not sufficient consultation and co-operation. I do not think that we have begun to think through where the boundary of education ends and the boundary of training for industry begins.
What, therefore, should Ministers do? No one can say that Ministers in the Department of Employment have been inactive in the past three years. They raced through the Trade Union and Labour Relations Act and the Health and Safety at Work Act. In 1975, they rushed through the Employment Protection Act. In 1976, they raced through the Dock Work Regulation Act, although

fortunately it blew up on the finishing line. Nevertheless, Ministers can claim that their time and energy have been spent pushing through major pieces of legislation. No such condition exists in 1977. The Government would do themselves a power of good if they took away this Bill and consulted management, industry, unions and the other organisations which have been mentioned and then came back again either with a measure or with some White Paper on this matter.
In my view, it never does any Government harm to say "We are thinking again in view of what this House has said." I invite the Government to do that in respect of this Bill.

9.42 p.m.

The Under-Secretary of State for Employment (Mr. John Golding): I suspect that this debate has been prolonged by the failure of Opposition Members to be available in sufficient numbers to vote upon the Bill. Looking at the activities of Whips and former Whips on the Opposition Benches, it has been my experience that they have failed to mount anything but a campaign directed by Whips.
I was extremely disappointed by the brevity of the contribution of the hon. Member for Harrow, West (Mr. Page). There was a time when he could have taken this debate single-handed to the winding-up, as Opposition Whips wanted, and I was extremely disappointed that he had to inconvenience other hon. Members tonight.
The contribution from my hon. Friend the Member for Thornaby (Mr. Wrigglesworth), speaking very much as a sponsored Labour and Co-operative Member, was a very thoughtful one. I appreciate that he regrets the necessity for this measure. However, the need to cut public expenditure, to reduce the public borrowing requirement and to give more selective assistance to industry is the basis of the measure.
My hon. Friend asked me a number of questions, and I shall try to answer them as briefly as possible. First, he asked about the costs of collection. The reason for the marked increase in collecting costs in 1973–74 was that the total amount collected by the Department of Health and Social Security dropped with


the abolition of the selective employment tax, leaving roughly the same collection costs to be apportioned between four instead of five beneficiaries. The Redundancy Fund pays only its true share of the total collection costs. I hope my hon. Friend will tell our friends in the Co-op that it is the result of the abolition of SET, and then they may take a different view of it.
Administrative costs have been remarkably stable. This is demonstrated if one looks at the approximate cost per case from 1973 onwards, without taking any account of inflation. In 1973 the cost was about £8 per case, in 1974 it rose to £9·50, in 1975 it dropped to £7, and in 1976 it went back to £9. My hon. Friend also speaks very strongly in support of civil servants, and I think he will agree that these figures show the efficiency of the Service.
On my hon. Friend's question of interest rates—that is, whether the best rates are obtained for the Redundancy Fund surplus—the answer is "Yes"—within the limits laid down by Parliament in Section 26 of the Redundancy Payments Act. My hon. Friend also asked about the question of generous employers. That is a point which we will take away and look at again. I shall not give any commitment, but I assure him that we shall look at it in the light of speeches on the Bill.
The speech of the hon. Member for Brentford and Isleworth (Mr. Hayhoe) was disappointing. Speaking for the Opposition, he asked whether there could be consultations between the CBI and TUC on manning and training. Has he not heard of the Manpower Services Commission? That body was established by the Conservatives to perform that very task. In fact, it is its daily task to bring the CBI, the TUC, local authorities and education interests together to discuss manpower.
With the exception of one brief reference, the hon. Member for Bedfordshire, South (Mr. Madel), in a more moderate speech, also failed to realise the importance of the Manpower Services Commission. Are the Opposition suggesting that we should scrap the Redundancy Payments Act? In a pussyfooting sort of way, that is what they seem to be saying in one speech after another.
I was deeply disturbed to hear the hon. member for Brentford and Isleworth quoting out of context the words of the present Permanent Secretary to the Department of Employment. The hon. Member should consider very carefully whether, from the Opposition Front Bench, he should try to involve civil servants in matters of public political controversy in this way. I say no more about it, but I believe that the hon. Member should not have said what he did.
The hon. Member for Brentford and Isleworth said that he wanted a review because cash payments were not the only way of ensuring mobility. When the Redundancy Payments Act was introduced, the speeches from the Opposition Benches were, in a sense, the same as those we have heard tonight. They are discussing unemployment benefit rather than redundancy payments, and from that Front Bench they have made that the purpose of the Bill. They have created one straw man after another and have then knocked them down.
I have read the Second Reading speeches on the Redundancy Payments Act. At the time the then Minister, Mr. Gunter said:
We have now moved on to another stage, and the Bill gives reality to the idea that, as The Times said in a recent leader commenting on the Bill,
'a man has some rights in his job just as an employer holds rights in his property, and his rights gain in value with the years.'
I would say to the House that if a man is deprived of those rights by economic circumstances outside his control, he ought to be compensated. Industry has long recognised the justice of this for higher management and I believe the House would agree that it is high time to extend it to all workers."—[Official Report, 26th April 1965; Vol. 711, c. 35.]
My hon. Friend the Member for Hackney, South and Shoreditch (Mr. Brown gave us figures of compensation tonight which have been given to leading industrialists, employers and highly-paid administrative workers. We on this side do not think that the principle established in 1965 is any less true now.

Mr. Scott: If that is the principle, and if that is the task of the Redundancy Payments Scheme, why is that right, which is built up over the years, extinguished once a person reaches the age of 64?

Mr. Golding: If the hon. Gentleman reads the later part of Mr. Gunter's speech, he will find that matter well dealt with.
We are not debating the principle of whether we should have redundancy payments. The basis of the Opposition's attack tonight is that they still confuse redundancy payments with unemployment benefit. We strongly believe that redundancy payments should remain. The hon. Member for Brentford and Isle-worth made up his own interpretation of the Chancellor's speech. It is clear from re-reading the Chancellor's statement that the importance of this measure is that it is one contribution towards shifting the emphasis towards selective assistance.
I share the concern expressed for the small firm and for any who are declared redundant. That is why I regard the temporary employment subsidy as having made such a great contribution in the last 12 months to helping small employers and to helping to avoid redundancy.
We heard the hon. Member for Brentford and Isleworth put forward a supposition about the figures, but I must tell him that the figure of £18 million is not and cannot be precise. It does not depend entirely upon the calculated future level of unemployment. We are not talking about unemployment benefit. Redundancy payments will be paid whether or not individuals are unemployed. It is compensation for loss of office.
At a time of high investment, there can be a substantial increase in the number of redundancies without any increase in unemployment. Conservative Members must get this clear. They opposed the Redundancy Payments Bill in 1965 on the basis that they would have preferred first to see wage-related benefits.
If less money is taken from the fund, more is available for lending to the Government, and that would reduce public expenditure. But borrowing from the fund does not take money permanently out of the fund. That is the answer to the hon. Member for Brentford and Isleworth.

Mr. Newton: I think I am following the Minister's argument, but I wonder

whether he recalls that during the debate on the national insurance contributions the argument was used the other way round—that the Government were only borrowing the money from the fund and that that was what justified it. Now the Minister says that to borrow the money would not be enough. Can he tell us which Government Department is arguing what?

Mr. Golding: I do not mind giving way to hon. Members who have understood the argument, but not to those who have just been wheeled in from the Smoking Room to fill in time, as was the hon. Member for Braintree (Mr. Newton). I have said clearly that the Bill makes it possible for a loan to be taken from the fund without loss to the fund itself.
The hon. Member for Aberdeenshire, East (Mr. Henderson) wanted to know whether it would be more difficult to keep workers and what the effect on unemployment would be. We cannot be precise about this. I have listened to the arguments put by the Conservative spokesman that if the redundancy rebate payment is reduced it will be more difficult for employers and they will be less inclined to lay workers off in consequence. If the Conservatives were right about that, and if the fact that employers would have to contribute a bigger lump sum would deter them, the effect would be marginal. There would be some savings in jobs, but that is the greatest weight that I would give to that argument. If the Conservatives are right, job savings would follow, but I do not think that that is necessarily true.
The hon. Member for Harrow, West asked for precise figures. I regret that they are not available, but the Northern Ireland estimate indicates a redundancy rate in 1977–78 of 31,000 and of approximately 33,000 in 1976–77. I shall try to let the hon. Member have more precise figures.
I return once more to the questions put by the hon. Member for Aberdeenshire, East. It is true that there were no consultations, but the hon. Member would have been fairer had he indicated to the House that in a previous Question he had asked me how many representations had been made. He really should


have quoted those figures as well. The number of representations was extremely low.
I shall not give way again because it is 9.59 p.m., and if I were not on my feet when the Division was called the

Whip would knock my head off. I commend the Bill to the House.

Question put, That the Bill be now read a Second time:—

The House divided: Ayes 129, Noes 130.

Division No. 58.]
AYES
[9.59 p.m.


Allaun, Frank
Hamilton, James (Bothwell)
Pavitt, Laurie


Armstrong, Ernest
Harper, Joseph
Richardson, Miss Jo


Ashton, Joe
Harrison, Walter (Wakefield)
Roberts, Albert (Normanton)


Atkinson, Norman
Heffer, Eric S.
Robinson, Geoffrey


Bates, Alf
Hooley, Frank
Rodgers, George (Chorley)


Bean, R. E.
Hoyle, Doug (Nelson)
Rodgers, Rt Hon William


Bennett, Andrew (Stockport N)
Hunter, Adam
Rooker, J. W.


Bishop, E. S.
Irvine, Rt Hon Sir A. (Edge Hill)
Rose, Paul B.


Blenkinsop, Arthur
Jackson, Colin (Brighouse)
Ross, Rt Hon W. (Kilmarnock)


Booth, Rt Hon Albert
Jackson, Miss Margaret (Lincoln)
Ryman, John


Bray, Dr Jeremy
Jay, Rt Hon Douglas
Sedgemore, Brian


Brown, Hugh D. (Provan)
John, Brynmor
Shore, Rt Hon Peter


Brown, Ronald (Hackney S)
Johnson, James (Hull West)
Sillars, James


Buchan, Norman
Jones, Barry (East Flint)
Skinner, Dennis


Callaghan, Jim (Middleton &amp; P)
Judd, Frank
Small, William


Canavan, Dennis
Kerr, Russell
Smith, John (N Lanarkshire)


Carmichael, Neil
Kilroy-Silk, Robert
Spearing, Nigel


Carter-Jones, Lewis
Lamond, James
Spriggs, Leslie


Cartwright, John
Leadbitter, Ted
Stallard, A. W.


Clemitson, Ivor
Lestor, Miss Joan (Eton &amp; Slough)
Stewart, Rt Hon M. (Fulham)


Cocks, Rt Hon Michael
Lewis, Ron (Carlisle)
Strang, Gavin


Cohen, Stanley
Loyden, Eddie
Summerskill, Hon Dr Shirley


Corbett, Robin
McCartney, Hugh
Taylor, Mrs Ann (Bolton W)


Cowans, Harry
McDonald, Dr Oonagh
Thomas, Ron (Bristol NW)


Cox, Thomas (Tooting)
McElhone, Frank
Tinn, James


Crawshaw, Richard
MacFarquhar, Roderick
Tuck, Raphael


Cryer, Bob
McGuire, Michael (Ince)
Wainwright, Edwin (Dearne V)


Cunningham, Dr J. (Whiteh)
MacKenzie, Gregor
Walker, Harold (Doncaster)


Davidson, Arthur
Maclennan, Robert
Walker, Terry (Kingswood)


Davis, Clinton (Hackney C)
McNamara, Kevin
Ward, Michael


Doig, Peter
Madden, Max
White, Frank R. (Bury)


Dormand, J. D.
Magee, Bryan
Whitehead, Phillip


Douglas-Mann, Bruce
Marks, Kenneth
Whitlock, William


Ellis, John (Brigg &amp; Scun)
Marshall, Dr Edmund (Goole)
Williams, Alan (Swansea W)


Ennals, David
Maynard, Miss Joan
Wilson, Alexander (Hamilton)


Evans, loan (Aberdare)
Mikardo, Ian
Wise, Mrs Audrey


Flannery, Martin
Millan, Rt Hon Bruce
Woodall, Alec


Fletcher, Ted (Darlington)
Miller, Dr M. S. (E Kilbride)
Woof, Robert


Fowler, Gerald (The Wrekin)
Morris, Charles R. (Openshaw)
Wrigglesworth, Ian


Fraser, John (Lambeth, N'w'd)
Murray, Rt Hon Ronald King



George, Bruce
Noble, Mike
TELLERS FOR THE AYES:


Golding, John
Orme, Rt Hon Stanley
Mr. David Stoddart and


Graham, Ted
Ovenden, John
Mr. Donald Coleman.


Grant, George (Morpeth)
Palmer, Arthur



Grant, John (Islington C)
Parker, John





NOES


Aitken, Jonathan
Cooke, Robert (Bristol W)
Hall, Sir John


Arnold, Tom
Cope, John
Hannam, John


Atkins, Rt Hon H. (Spelthorne)
Corrie, John
Hayhoe, Barney


Bain, Mrs Margaret
Costain, A. P.
Henderson, Douglas


Banks, Robert
Crawford, Douglas
Hicks, Robert


Beith, A. J.
Dean, Paul (N Somerset)
Hodgson, Robin


Benyon, W.
Dodsworth, Geoffrey
Holland, Philip


Berry, Hon Anthony
Douglas-Hamilton, Lord James
Hunt, David (Wirral)


Biffen, John
Drayson, Burnaby
Hunt, John (Bromley)


Boscawen, Hon Robert
Eden, Rt Hn Sir John
Hutchison, Michael Clark


Bottomley, Peter
Ewing, Mrs Winifred (Moray)
James, David


Boyson, Dr Rhodes (Brent)
Eyre, Reginald
Johnson Smith, G. (E Grinstead)


Brocklebank-Fowler, C.
Fairgrieve, Russell
King, Evelyn (South Dorset)


Brotherton, Michael
Fisher, Sir Nigel
Knight, Mrs Jill


Buck, Antony
Fookes, Miss Janet
Knox, David


Bulmer, Esmond
Fowler, Norman (Sutton C'f'd)
Langford-Holt, Sir John


Butler, Adam (Bosworth)
Glyn, Dr Alan
Latham, Michael (Melton)


Carlisle, Mark
Godber, Rt Hon Joseph
Lawrence, Ivan


Chalker, Mrs Lynda
Goodhew, Victor
Lawson, Nigel


Clark, Alan (Plymouth, Sutton)
Gorst, John
Le Merchant, Spencer


Clark, William (Croydon S)
Gow, Ian (Eastbourne)
Luce, Richard


Clegg, Walter
Gray, Hamish
McAdden, Sir Stephen


Cockcroft, John
Grist, Ian
MacCormick, Iain




McCrindle, Robert
Page, Richard (Workington)
Stewart, Rt Hon Donald


Madel, David
Penhaligon, David
Stewart, Ian (Hitchin)


Marten, Neil
Percival, Ian
Stradling Thomas, J.


Mates, Michael
Prior, Rt Hon James
Tapsell, Peter


Mather, Carol
Rathbone, Tim
Tebbit, Norman


Maudling, Rt Hon Reginald
Rees-Davies, W. R.
Thompson, George


Mawby, Ray
Renton, Rt Hon Sir D. (Hunts)
Townsend, Cyril D.


Maxwell-Hyslop, Robin
Rippon, Rt Hon Geoffrey
Vaughan, Dr Gerard


Mayhew, Patrick
Roberts, Michael (Cardiff NW)
Walder, David (Clitheroe)


Meyer, Sir Anthony
Roberts, Wyn (Conway)
Walker, Rt Hon P. (Worcester)


Miller, Hal (Bromsgrove)
Ross, Stephen (Isle of Wight)
Wall, Patrick


Mills, Peter
Scott, Nicholas
Walters, Dennis


Mitchell, David (Basingstoke)
Shaw, Giles (Pudsey)
Watt, Hamish


Moate, Roger
Shelton, William (Streatham)
Weatherill, Bernard


Moore, John (Croydon C)
Shepherd, Colin
Welsh, Andrew


More, Jasper (Ludlow)
Silvester, Fred
Wigley, Dafydd


Morrison, Charles (Devizes)
Sinclair, Sir George
Winterton, Nicholas


Morrison, Hon Peter (Chester)
Skeet, T. H. H.



Nelson, Anthony
Spence, John
TELLERS FOR THE NOES:


Neubert, Michael
Spicer, Michael (S Worcester)
Mr. Jim Lester and


Page, John (Harrow West)
Stainton, Keith
Sir George Young.


Page, Rt Hon R. Graham (Crosby)
Stanbrook, Ivor

Question accordingly negatived

Orders of the Day — EUROPEAN COMMUNITY (COMMERCIAL VEHICLE TAXATION)

10.12 p.m.

The Under-Secretary of State for Transport (Mr. John Horam): rose—

Mr. Norman Fowler: On a point of order, Mr. Speaker. May I ask for your guidance on this point? The House is being asked to take note of and to welcome the latest proposals of the European Commission concerning the taxation of commercial road vehicles. The difficulty is that we do not in fact have in front of us the latest proposals that we are supposed to be taking note of and welcoming. All that we have at present is, first, a draft directive of 1968—nine years ago—and, secondly, an explanatory memorandum from the then Minister for Transport, towards the end of last year, which states that during protracted consideration in the Transport Questions Working Group the text and content of the draft directive have been changed considerably from the original version.
That puts the House in a very considerable difficulty, if not in an impossible situation. It means that the basic material necessary for this debate has not been made available to the House. We can debate the 1968 directive, but we are told on the Secretary of State's own authority that the proposals included in the 1968 directive are out of date. Surely that makes the position of the House quite impossible.
In the last few minutes I have been handed by my hon. Friend the Member for Bromsgrove and Redditch (Mr. Miller) information that he has received from an outside organisation, which is in fact the up-to-date directive that we are seeking.
It seems that in those circumstances it is quite impossible to have a realistic and sensible debate on this question. It is quite unfair for the Government to ask us to do that. May I respectfully ask you, Mr. Speaker, whether you can adjourn the debate and will adjourn it until the documents are made available?

Mr. Hal Miller: Further to that point of order, Mr. Speaker—

Mr. Kevin McNamara: Further to that point of order—

Mr. Speaker: I shall call the hon. Member for Kingston upon Hull, Central (Mr. McNamara) later. Mr. Miller.

Mr. Miller: Further to that point of order, Mr. Speaker. I should like to make plain to the House that in attempting to brief myself for this debate I sought the views of a number of organisations, one of which provided me with a draft directive dated 2nd June 1976. It is not the same text as the draft directive available in the Vote Office, which I have just checked at five minutes to 10. I should therefore be most grateful if we could be given some guidance on what we are supposed to be discussing and on what document is the basis of tonight's debate I am considerably puzzled.

Mr. Horam: Further to that point of order, perhaps I could explain—

Mr. Douglas Jay: On a point of order—

Mr. McNamara: rose—

Mr. Speaker: Order. I understand that the Minister is on the point of order. I have promised to call the hon. Member for Kingston upon Hull, Central, if his doubts still linger.

Mr. Horam: Further to that point of order, Mr. Speaker. I can explain the position to the House. The draft directive was issued in 1968, as has been pointed out, and certainly the negotiations which have been carried on since then have made it out of date. But we were asked by the Scrutiny Committee in 1975, seven years after the issue of the draft directive, to debate the subject. At the time, the draft directive was already out of date and negotiations had not produced any substantial proposal in a form that could be sensibly debated by the House. We thought it best to wait a little longer.
We waited until 1976, by which time negotiations had reached the stage where there were firm proposals, but they were not the subject of a revised draft directive. If the hon. Member for Bromsgrove and Redditch (Mr. Miller) thinks


that he has a revised draft directive, he is wrong. He may have some working papers, but there is no revised draft directive in existence.
However, we are under an obligation to the Scrutiny Committee to discuss the Community proposals. We therefore put to the House the memorandum of 30th November, which is what we are debating today. It covers the proposals that the EEC Committee has made. This procedure is one that we have adopted before—[HON. MEMBERS: "Wrongly."] Rightly or wrongly, this procedure has been adopted before in the situation where the Scrutiny Committee has recommended that we should have a debate.
We are anxious to have a debate, but there is no directive that is relevant, in the sense that the old directive is out of date and there is no new revised directive. Therefore, we felt it right to go ahead with this debate on the memorandum that the Minister put forward. We did this on 12th November, on the roadworthiness directive, which was in exactly the same position. It was extensively revised and no substantial paper was produced which we could give to the House. We therefore proceeded on the basis of the memorandum, identical to this in form and shape. I hope that the House will think this a reasonable way to proceed now.

Several Hon. Members: rose—

Mr. Speaker: Order. I shall call further points of order, but I must tell the House that these points of order will come out of the time that would have been available for the discussion of the motion before the House.

Mr. McNamara: On a point of order, Mr. Speaker. Having listened to the statement which the Under-Secretary has made, my mind is still boggling over what exactly we are supposed to be discussing. Are we to discuss the draft directive that originally came out, which says, in Article 4:
Member States shall abolish the taxes or charges mentioned in Article 2 and replace them by a road infrastructure tax."?
Looking at Article 2—I am sure our colleagues in Germany, Belgium, France, Italy, Luxembourg and the Netherlands have many things to discuss about infrastructure

taxes—there does not appear to be any mention of the United Kingdom. Ireland or Denmark. Paragraph 6 of the Explanatory Memorandum sent to us by the Minister and signed by him states that:
The general effect of the changes has been to produce a more flexible system allowing Member States greater discretion.
With great respect, Mr. Speaker, what the hell are we talking about?

Mr. Speaker: Order.

Mr. McNamara: I beg your pardon, Mr. Speaker. I should be grateful if we could be informed what the subject of the debate is. I cannot see what system we are talking about that has greater flexibility. For example, there is a statement that the axle weight shall rise from 500 to 2,000 kilograms—an increase of 400 per cent., which even in these inflationary days is a record, but we do not know what base rate it is to be applied to.
In those circumstances, surely it would be in the interests of the House for you, Mr. Speaker, to suggest that the Minister should take this directive away and return to the House with something that he could discuss and debate and about whose implications perhaps even the Ministry in its temerity might have spoken to the trades unions involved. Then perhaps we should have before us something we could talk about. At present it is nothing.

Mr. Speaker: In answer to the hon. Member for Kingston upon Hull, Central may I tell the House that it is not for me to explain to the House what it is discussing? It is for the Minister to do that in his speech.
I must announce to the House that I have not selected the amendment, but the hon. Gentleman, if he catches my eye, will be able to make his point during the debate.

Mr. Horam: rose—

Mr. Neil Marten: On a point of order, Mr. Speaker. Following on the previous points of order, may I point out that paragraph 15 of the Explanatory Memorandum states that
Organisations representing manufacturers and haulage operators are now generally content with the draft directive in its revised form.


Surely in that case there must be a draft directive in its revised form. If that statement is incorrect, we cannot assume that the other matters in the memorandum are correct. Therefore, what are we debating? It is a document that is incorrect. The only thing for the Minister to do is to withdraw the document with good grace and return to the House with a proper one. He will gain great respect from the House if he takes that commonsense course.

Mr. Horam: Further to that point of order, Mr. Speaker. I should like to be able to make a speech on this subject and then perhaps I could clear up some of the detailed points—[Interruption.]

Mr. Speaker: Order. Is the Minister rising on a point of order?

Mr. Horam: I was rising on a point of order, Mr. Speaker.

Mr. Speaker: Then I shall be glad to hear it.

Mr. Horam: I thought that I was allowed to get one graceful remark out before I embarked upon the point of order.
On the point of order, we are discussing the Explanatory Memorandum that is before us. That is the proposal to which the motion relates. We are not discussing anything else. We are not discussing the draft directive of 1968.

Mr. Ian Mikardo: On a point of order, Mr. Speaker—

Mr. Nigel Spearing: On apoint of order, Mr. Speaker—

Mr. Jay: On a point of order, Mr. Speaker—

Mr. Marten: On a point of order, Mr. Speaker—

Mr. Speaker: I call Mr. Mikardo.

Mr. Mikardo: My hon. Friend the Under-Secretary of State has answered the point made by the hon. Member for Banbury (Mr. Marten). The memorandum that the Under-Secretary states that we are to discuss clearly states than there is a draft directive. If there is a draft directive, the only thing competent for

us to discuss is the draft directive. That draft directive is not available to Members, but I understand that it is available to the hon. Member for Bromsgrove and Redditch (Mr. Miller), who, of course, would not be permitted by the rules of order to quote from it, because nobody may quote from a document without laying it before the House.
It is therefore clear, as the hon. Member for Banbury said, either that the memorandum is wrong in stating that there is a draft directive—in which case we can attach no credence to it—or, if it is right, that we should have that draft directive before us. Since it is not before us and since no one may use it in support of any argument, I therefore support the suggestion that the only proper procedure is that you, Mr. Speaker, should accept a motion that the debate be adjourned.

Mr. Speaker: Order. I have in my hand the document that we are supposed to be discussing. If the House does not like what the Minister says, its remedy is in the Division Lobby. The remedy is not to have points of order for the duration of the time allotted for this debate.

Mr. Jay: Further to that point of order, Mr. Speaker. The motion before the House asks us to take note not of the Explanatory Memorandum, but of "the latest proposals". These proposals relate to the draft directive, not the Explanatory Memorandum to which the Minister has referred. Therefore we are in difficulty.
Does this situation not show that the method by which EEC legislation is conducted is so profoundly unsatisfactory that it borders on the disreputable? First, the Council of Ministers meets in secret and purports to legislate without any record at all; secondly, this House is asked to give its views without having the substantive documents before it; and, thirdly, we learn tonight that a draft directive, which apparently is not a draft directive, is in the hands of one side of the House but not the other. That seems an absolutely impossible situation for the House to proceed to a debate.
My suggestion, in line with that made by the hon. Member for Sutton Coldfield (Mr. Fowler), is that the Government should take this matter back, resume the debate when they have the substantial document in their possession, and, in addition, give an undertaking that they


will not meanwhile accept any decision or regulation made in Brussels until this matter has been properly debated by the House.

Mr. Horam: Further to that point of order, Mr. Speaker. The reason for our going ahead with the debate today was a desire to have the subject debated. I think that the House would probably accept that, in essence, this is a noncontroversial subject. [Interruption.] We had a demand from the Scrutiny Committee in 1975 to debate this matter and we felt that we ought to honour that request now. However, I have taken on board the feeling of the House.
Clearly there appears to be some misunderstanding about the revised draft directive. There is no revised draft directive, as such, but there are working papers. In order that the matter may be clarified in a sensible way and that we may bring forward this measure at a better time, when we have had an opportunity of having further talks about it—I am not anxious to stir things up on what I regard as a very worthwhile measure—I shall certainly withdraw the motion.

Mr. Speaker: Order. There is nothing to withdraw yet. It has not been proposed.

Orders of the Day — A49, LEEBOTWOOD (SPEED LIMIT)

Motion made, and Question proposed, That this House do now adjourn.—[Mrs. Ann Taylor.]

10.30 p.m.

Sir John Langford-Holt: Interruption.rose—

Mr. Speaker: Order. Hon. Members must realise that an hon. Member is trying to address the House.

Sir J. Langford-Holt: The Minister has had a fairly rough passage for the last half hour, and I am sorry to have to prolong his inconvenience.
As with most Adjournment debates, this is a comparatively small matter. I am sure that it is no new problem to the Department. I repeat that this is a small matter, but it is important to citizens of this country that they should be able to have small matters ventilated in this House.
I want to discuss a matter that I have raised with the Department over a long period. It concerns a speed limit through one village in my constituency. This is a village which, as has happened in many parts of the country, grew up round a rural road and now finds itself sitting on a main artery of the transport system. The artery of which this road forms part is between Manchester and the North Midlands at one end and South Wales at the other. Much of the heavy traffic that causes the trouble passes through this village.
The history of this complaint goes back over many years. The Minister will be aware of it. I know it, and the people concerned know it. If you, Mr. Speaker, want to know the history, I can convey it to you later, but not now.
The first thing to consider is whether there is a need for a speed limit. Secondly, if there is no need for a limit, what are the alternatives? For many years the Department has used what it calls criteria—but perhaps one could call them tests—to decide whether a speed limit is necessary. These criteria are, first, the accident rate; secondly, some horrible thing called 85 percentile—a revolting expression—which is, I understand, the speed at which 85 per cent. of motorists travel under ordinary circumstances; and, thirdly, the characteristics of the road and—and here I use the Secretary of State's words—
the extent to which neighbouring land is developed and the presence of potential hazards.
There we have accident rate, speed and road characteristics.
I am doubtful that in this case the Department or even the police are aware of all the accidents that take place. They never hear about the near misses, that is for sure, by their very definition. Even the secretary of the parochial church council, in writing to me on another matter, spoke of the
many traffic incidents which occur in the village
I ask the Minister to note the use of the word "incidents" rather than "accidents".
In August and September there were two accidents. There may have been some since, and there may have been some before. I assure the Minister that I am not being selective. These are things


that happened and were brought to my notice. There was a lesser accident in August, and a worse one on 6th September.
I give the Minister a description of the accident that occurred outside the village shop in Leebotwood—the name of the village involved—on Monday 6th September. It involved two cars. One was leaving the Leebotwood shop, and the other was travelling from Shrewsbury towards Church Stretton. Three people, two women and one little girl of five or six, were badly hurt and taken to hospital in Shrewsbury. Both cars were severely damaged. In the interests of brevity I shall not read the rest of the description. The Department talks about the accident rate. If that sort of accident, occurring twice in one year, is not an "unacceptable accident rate", what is?
The second test is the 85 percentile. Who carries out the tests of this percentile? It is done by the police. It sounds a good idea, but is it? One could say that the police are the obvious people to do it; they have the equipment and the facilities, so let them get on with it. The police are enforcers of the law and should not carry out these experiments and inquiries. No one passes a police speed trap, or what may look like one, without being very careful.
On 22nd December the Secretary of State wrote to me, partly as a result of representations from me, to say:
We will ask the police to make a further speed check.
In my view this should have been a civilian matter and an unobtrusive check should have been made. It is worth asking the Minister why it took one month from the date of that decision to make the check to send two or three coppers out to do the necessary.
What was this test? I have a letter from a retired colonel who lives in the village. I have his description of the test—and bear in mind it is upon this that the Secretary of State bases his statistics. The letter is dated 21st January and says:
This morning at about 11 a.m. a police radar car arrived and set up the equipment outside Leebotwood Village Hall. Although I had asked the police to let me know when they were coming I knew nothing about their arrival until the village shopkeeper telephoned me to tell me what was happening

The morning was very dull and the road was wet. Traffic was heavy. There were queues of six or seven cars travelling very slowly behind heavy lorries. A tractor with a load of hay came past with two cars following it at about 10 m.p.h. to 12 m.p.h. All these vehicles and their speeds were recorded. I understand from the two police officers present that they were trying to arrive at an average speed. While I was there only one car had a completely clear run and that was recorded at 61 m.p.h. The police officers, who were most co-operative, were both in uniform but were seated in a plain car and were not wearing caps.
It is upon this that the Minister's statistics are based.
Until the oil crisis the speed limit in this country was 70 m.p.h. I tried, before that point, to get the speed limit on this road lowered. It was deemed to be impossible to do that because of the criteria the Minister has mentioned. What I would point out is that although it was not deemed suitable to lower the limit on this road going through the village, for every foot of the main A5 between London and Shrewsbury which passes through Shropshire there was imposed a limit of 50 m.p.h. The criteria were presumably met by the main road but not by the lesser A49. It seems a strange commentary on 30 years of road progress. It certainly shows the futility of some of the arguments we have heard.
The Minister has mentioned the characteristics of the area and the extent to which the land is developed. We are talking about a country area, not Birmingham, London or Cardiff. The parish room is on the opposite side of the road to the pub. There is a bridge, a brook and several farms. The one telephone box in the village is on the opposite side of the road to the pub. I do not wish to exaggerate, but the result is that people are frequently crossing. Children are frightened to cross. I can quote cases of children frightened to walk alongside the road, let alone cross it. In addition, cattle and farm vehicles use the road.
What are the alternatives? One is that we could build a bypass. I do not suggest that for one moment, because it is economically impossible and probably not desirable. I know the area well, having lived on the road for three years.
The second possibility is to have a pedestrian crossing, but for that it is necessary to have a refuge in the middle of the road. That is the general policy.


I have been trying to secure pedestrian crossings in Shrewsbury and have always been refused on the ground that there is no room for a refuge. The third possibility is a speed limit, which is what I am asking for. The fourth is double white lines, because it is not desirable that cars should swing out and go across the centre of the road, as they do now. The final possibility is to do nothing.
I am afraid that one day there will be an accident which will result in death. I have no doubt that then we shall have a speed limit, white lines and all sorts of things.
Before the Minister settles into a feeling of too much satisfaction over this, apart from what I have said about the way in which the statistics are obtained, he had better remember that it was his own Department which, in 1947, decided that cat's eyes in the middle of roads were of no further value.
In conclusion, I should like to quote from a letter to me from the local county councillor, who does not know of my intention to quote it. He says:
The situation now is that the County Council, the Parish Council, the people and their representatives recommend the Minister to take further positive action to institute a speed limit … together with a double white line and the other items now referred to the highway authority".
I hope that the Minister will help me in this respect.

10.42 p.m.

The Under-Secretary of State for Transport (Mr. John Horam): I have listened with great interest and sympathy to the hon. Gentleman's remarks about the difficulties that residents of Leebotwood have to suffer because they are living beside a busy trunk road, with their community divided in two by the pressure of traffic. As I represent an area that is astride the A1, I can assure the hon. Gentleman that I well understand the sort of problems to which that leads, even if they are on a rather smaller scale with the 150 or so inhabitants of Leebotwood. We all sympathise with communities in that sort of situation. They have a great deal to put up with. Their peace is disturbed and they feel continually harassed and threatened by heavy lorries travelling on roads which were not designed to carry them properly. They have to face the risks involved every time they cross

the road to the shops, to visit their friends, to take their children to school, or to collect their pension.
The hon. Gentleman has brought this problem before the House before, and has brought it to the attention of successive Governments. We should congratulate him on not giving up. I am sure that persistence is an art in his part of the world.
I now turn to the specific problems raised by the hon. Gentleman. Between Hereford and Shrewsbury, the A49, on which Leebotwood lies, is an important part of the trunk road network. It is a major strategic route between South Wales and the South-West at the one end and North Wales and Merseyside at the northern end. It is particularly important as a link between North and South Wales, and has considerable significance for the development of extensive rural areas along the border. The M5 and M6 motorways run in the same general north-south direction, but, since they are generally some 25 miles further to the east they do not serve the same border communities. The A49 is therefore expected to remain an important part of the strategic network of trunk roads, and, although the Department is unlikely in the foreseeable future to need to replace it with any motorway or other new route, the possibility of improving it is always under consideration.
The traffic is fairly heavy. We reckon that about 13 per cent. of the vehicles using the A49 in that area are heavy vehicles, which obviously cause particular problems. It is a single-carriageway road, in many parts winding, and in places no more than about 22 ft. wide, with hedges and only minimal verges. Over the years small improvements have removed many of the worst bends and widened substantial lengths of the carriageway to the current standard of 24 ft., with at least 6 ft. wide verges and footways where appropriate. A few major schemes, such as Ludlow Bypass, and bypasses of Ashton, Brimfield and Leominster, have been in the trunk road preparation pool for several years.
I am happy to be able to tell the hon. Member for Ludlow (Mr. More) that we were able to select Ludlow for at least not the worst treatment in the announcement we made two weeks ago as to our priorities for road schemes, and I hope


that work there will be starting soon. It has not been substantially affected under our revised proposals, as we have given it a higher priority than in the past, because we recognise the strong claims of the area.
The village of Leebotwood is about three miles south of the village of Dorrington, in a length of almost 5½ miles to the north of Church Stretton, which at one time and another has been improved to a reasonably good single carriageway standard. It is very much a rural area. There are only about 150 residents. On one side of the road, only 10 per cent. of the frontage is built up. On the trunk road, there is only one shop, the parish hall and one public house, the Pound Inn. There is no garage on the road, and no school or church, with the result that the trunk road tends to be much less cluttered with parked and stopping vehicles than is usual in a village, and congestion is minimal. There is still scope for further improvement in the layout of the road at the northern end of the village, but through Leebotwood it is generally wide with adequate visibility, and through-traffic is able to move freely.
However, as the hon. Gentleman explained, there has been a number of accidents, including, tragically, one fatal accident, since August 1974.

Sir J. Langford-Holt: My figures were for last year.

Mr. Horam: There were two accidents last year and four over a three-year period, which has resulted in consideration whether there should be a speed limit of the kind that the hon. Gentleman proposes. Not surprisingly, the reaction of local inhabitants has been to press the Department to impose various restrictions, particularly a 40 m.p.h. speed limit through the village.
At present, of course, as a single carriageway road, the A49 through Leebotwood is subject to the 50 m.p.h. speed limit imposed by the Temporary Speed Limit Order 1975, which was extended for a further period of six months from 1st December 1976, and I would recommend its continuance there if national limits for single carriageway roads were to be lifted in the revision that we are currently considering. However, I remind

the hon. Gentleman that, under Schedule 5 of the Road Traffic Regulation Act 1967, heavy goods vehicles are, except on motorways, subject to an overall 40 m.p.h. speed limit. That is an additional protection for the village, although there is, of course, the problem of policing, which is not always easy to do.
I fully appreciate the anguish that tragic accidents arouse, particularly in a small, closely-knit community, and the concern that something should be done to prevent a recurrence, but unless it is clear that there is an identifiable link between the incidence of accidents and the speed of traffic, a speed restriction, even if it can be enforced, is no real safeguard. It is unlikely to prevent further accidents, and on a relatively good road with reasonable visibility, such as there is through Leebotwood, it can only reduce the motorist's respect for speed limits generally.
The four accidents that have taken place since 1974 have not really been caused by excessive speed; they have been caused by other problems. The Department has evolved certain national standards by which to judge whether a particular speed limit would be appropriate in an area. The hon. Gentleman listed the criteria. I agree that they are full of jargon and words that are not always easy to understand, but they relate primarily to the excessive speed of traffic and the rate of accidents over a three-year period.
There is some flexibility, in that the nature of the road and its surroundings are also taken into account. Unfortunately, as I have said, the visibility along the road through Leebotwood and the nature of the road in the area do not add to the case for speed limits there.
In response to the hon. Gentleman's representations, the case for a 40 m.p.h. limit in Leebotwood has been considered. I assure him that we shall consider it in the light of the criteria. However, there is the problem that we have no clear evidence at present that the four accidents that have taken place were caused by excessive speed.
A further suggestion has been made, namely, that the double white lines in the centre of the road be extended through the village. That suggestion is unacceptable, on the same grounds. Double white lines are intended to indicate locations


where road conditions make it unsafe for vehicles to cross the lines when overtaking, or to park in that length of road. Although a system of double white lines exists on the northern approach to Leebotwood, where these criteria are met, there is no case for extending them through the village, on the relatively straight stretch of road, where the criteria are not met.
I understand the strong feelings of the residents who want more protection and who possibly feel that local needs are subject to some inflexible dogma from the Department of Transport. I assure them that that is not the case. We try to consider matters as much as possible from a human and local point of view, while taking into account the criteria. We try to interpret them as flexibly and justly as we can. I appreciate the feelings of those in the village, and we can try to help in one or two ways.
As the hon. Gentleman knows, we have already taken some action to reduce potential hazards. A number of additional carriageway markings and warning signs have been provided, a hedge has been cut back to improve visibility, and a fence has been erected outside the Pound Inn. I undertake to give urgent consideration to further improvements, such as the removal of a public telephone box from its present position adjacent to the junction with the

private road called Cooper's Meadow, where the one fatality occurred. There is some evidence that the telephone box obscures visibility, and there are alternative places where it could be put. I undertake to look into that possibility. I shall be able to do so fairly quickly.
There are further possibilities—for example, possibly cutting back the hedges in that part of the village, although that will be a longer-term project. Certainly that will be considered if we feel that it will help. A hedge has been cut to improve visibility, and perhaps we can take that policy further. Partly, it may be done by trimming, but it may be necessary to consider a more fundamental approach. The right way forward at the moment is to seek to improve the visibility at the road junctions. Accidents appear to have occurred when people have turned into the road or tunred off it and have been struck at that point rather than be excessive speed in itself.
I assure the hon. Gentleman that we shall look sympathetically at these minor improvements, which I hope will make a positive contribution to the safety of the road through the village.

Question put and agreed to.

Adjourned accordingly at seven minutes to Eleven o'clock.